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CURRENT  PROBLEMS 


NUMBER  9 


ECONOMIC  ADDRESSES 

BY 

WILLIAM  WATTS  FOLWELL,  LL.D. 
— 

Professor  of  Political  Science  Emeritus  in  the  University  of  Minnesota 


MINNEAPOLIS 

Bulletin  of  the  University  of  Minnesota 

July   1918 


< 


Copyright   1918 

BY    THE 

University  of   Minnesota 


CONTENTS 

The  Ethics  of  Business 3 

Trusts 31 

The  Single  Tax 49 

Sociahsm  True  and  False 73 

The  New  Economics 91 


THE  ETHICS  OF  BUSINESS 


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THE  ETHICS  OF  BUSINESS 

The  following  address  was  prepared  for  and  used  as  one  of  a  series 
of  lectures  offered  by  the  University  Extension  Department  of  the 
University  of  Chicago,  in  the  winter  of  1905.  It  was  given  in  Des 
Moines,  Iowa;  Kansas  City  and  St.  Joseph,  Missouri;  Saint  Paul  and 
Minneapolis,  Minnesota.     It  was  later  delivered  before  various  audiences. 

For  a  discussion  which  must  close  before  bedtime,  a  speaker 
may  not  follow  the  example  of  Diedrich  Knickerbocker,  who 
began  his  famous  History  of  New  York  with  the  creation  of 
the^  world.  We  are  obliged  to  assume  that  some  things  have 
been  settled.     I  will  ask  that  these  four  be  so  assumed: 

First,  the  institution  of  private  property;  second,  the  right 
and  duty  of  organized  society  to  control  that  institution;  third, 
the  advantages,  individual  and  social,  of  the  division  of  labor; 
fourth,  the  advantages,  individual  and  social,  of  exchange.  These 
granted,  it  is  evident,  or  will  be  after  a  little  reflection,  that 
at  some  time  in  the  social  evolution  the  trader  must  appear. 

Before  the  trader,  however,  came  the  market.  The  re- 
searches of  Sir  Henry  Maine  and  others  have  revealed  the  origin 
of  the  market,  for  the  Aryan  or  Indo-European  family  of  man- 
kind at  least.  Within  those  primitive  village  communities  into 
which  our  remote  ancestors  were  grouped,  the  exchange  of  prod- 
ucts was  merely  a  matter  of  neighborly  accommodation.  This 
man  had  fish,  a  kinsman  had  game,  to  spare.  They  exchanged. 
Both  were  gratified;  neither  thought  of  an  advantage  gained 
over  the  other.  Doubtless  custom,  which  in  primitive  commu- 
nities stands  for  law,  moderated  the  trifling  transactions. 

Exchanges,  however,  arose  between  adjoining  communities 
and  a  custom  grew  of  resorting  to  convenient  gathering  places 
on  the  common  border  line — the  mark  they  called  it.  Here  on 
the  mark — the  market  came  to  be  held  at  customary  times  and 
seasons.  Here  the  dealings  were  no  longer  those  of  fellow 
tribesmen,  but  of  strangers;  and,  among  all  primitive  men, 
stranger  and  enemy  were  the  same.  To  get  the  better  of  the 
bargain  was  not  merely  allowable,  it  was  meritorious.  Un- 
mitigated competition  was  the  rule  of  the  market,  and  abso- 
lute title  passed  to  every  article  which  changed  hands. 

"The  general  rule  of  law  [the  common  law  of  England],  is  that  all 
sales  and  contracts  of  any  thing  vendible  in  fairs  and  markets  overt, 


4  WILLIAM  WATTS  FOLWELL 

[that  is,  open],  shall  not  only  be  binding  between  the  parties,  but  also  be 
binding  on  all  those  that  have  any  right  or  property  therein."' 

But,  the  gathering  of  the  clans  for  purposes  of  barter  could 
not  continue  indefinitely.  That  meant  the  suspension  of  in- 
dustn.',  absences  from  home,  and  wear}'  marches.  It  meant 
great  loss  of  time  and  anxiety  while  demanders  waited  on  the 
market  for  suppliers  who  should  possess  the  specific  goods 
desired,  and  themselves  be  wanting  the  articles  offered  by  the 
parties  of  the  first  part.  Long  delays  occurred  while  the  parties 
were  pairing  off  and  often  the  sun  would  go  down  on  many 
who  had  waited  in  vain. 

Plato  in  his  Republic  has  perfectly  described  the  remedy  for 
such  a  state  of  things.'  The  merchant — ^the  marketman — 
appeared.  Pitching  his  tent  or  booth  at  some  ford  or  cross- 
roads he  annoimced  himself  as  a  general  receiver  and  distrib- 
uter of  commodities.  Had  he  come  bare-handed  his  adver- 
tisement ^uld  have  been  mere  wind.  He  did  not  come  empty- 
handed.  He  brought  two  bags,  which  gave  him  a  power  be- 
yond that  of  any  magician — a  bag  of  money,  and  a  bag  of 
weights  and  measures.  Standing  behind  his  pile  of  coin,  with 
his  balances  and  weights  and  cubit  measure,  he  could  do  busi- 
ness. He  could  buy  of  all  sellers,  and  sell  to  all  buyers,  in ,  any 
desired  qtiantities.  Did  the  trader  invent  these  tools  of  his 
craft, — measvu-es  and  weights;  and  coins,  which  are  a  species  of 
weights?  This  question  is  disputed.  My  guess  is  that  he  did. 
If  so,  how  great  a  debt  is  due  him!  Can  you  think  of  any 
invention  of  greater  moment  to  humanity,  except  that  of 
language  ? 

Becatise  the  primitive  market  was  open  only  on  certain  days, 
probably  determined  by  phases  of  the  moon,  the  early  mer- 
chant was  itinerant  and  jotuneyed  from  market  to  market. 
He  took  with  him  his  two  bags,  and  such  merchandise  as  he 
might  expect  to  sell  or  exchange  at  the  next  stand.  Here  we 
have  the  origin  of  the  mercantile  fairs  of  the  Middle  Ages,  of 
which  we  have  notable  survivals  still  in  the  book  fair  of  Leipsic 
and  the  great  general  fair  at  Novgorod  in  Russia.  Although 
the  local  market  place  and  day,  and  the  traveling  merchant 
continued  in  existence  much  longer  than  most  of  us  would 
suppose,  they  have  disappeared.  Every  city,  \411age,  and  hamlet 
is  a  market  place;  all  days  but  Stmdays  are  market  days;  and 


ECONOMIC  ADDRESSES  S 

merchants  are  resident.  Substantially  the  whole  civilized  world 
is  a  market  all  the  time.  Some  five  millions  of  our  country- 
men are  employed  in  the  handling,  the  moving,  and  sale  of 
goods, — about  sixteen  and  one-half  per  cent  of  the  working 
population. 

The  establishment  of  the  market,  with  its  coin,  weights,  and 
measures,  was  one  of  the  great  landmarks  in  the  history  of  man, 
and  its  development  and  extension  have  set  the  pace  for  the 
march  of  civilization  itself.  Doubtless  Adam  Smith  was  cor- 
rect when  he  said  "it  is  the  trucking  disposition  which  originally 
gave  occasion  to  the  division  of  labor,"  having  already  argued 
that  it  Ts  the  division  of  labor  "which  occasions  .  .  .  that 
universal  opulence"^  which  exists  in  modem  society.  One 
might  safely  say  that  the  market  created  industry.  Where 
there  is  a  market,  continuous  and  universal,  goods  are  made 
to  sell.  Barter  with  its  exasperating  limitations  as  to  place, 
time,  the  parties  and  their  needs,  disappears.  Industry  goes 
on  every  day  and  steady  streams  of  products  flow  like  rivers 
to  the  all-receiving  ocean. 

We  have  spoken  as  if  money  accompanied  by  weights  and 
measiires  was  used  by  the  primitive  trader  as  a  mere  tool  only, 
an  intermediary  commodity  to  facilitate  exchanges,  a  "medium 
of  exchange."  He  and  his  clients,  however,  found  another  use 
for  money,  of  equal  account,  at  least.  It  served  as  a  guide  and 
norm  to  the  judgments  and  estimations  of  buyers  and  sellers. 
Money  became  a  "standard  of  value" — a  phrase  convenient,  if 
not  quite  exact.  Accordingly,  the  phenomenon — the  outward 
fact — of  price  appeared,  and  along  with  price  the  comprehend- 
ing idea  of  value  which  pervades  not  only  the  market,  but  all 
society.  Value  is  only  and  always  an  idea,  —  a  thing  of  the 
mind. 

I  submit  the  suggestion  that  price  and  value  have  no  prac- 
tical sense,  unless  in  connection  with  a  market,  and  merchants 
trading  there.  The  fact  of  price  and  the  idea  of  value  emerge 
in  the  field  of  exchange,  not  in  that  of  production.  It  is  a 
socialist  heresy — their  fundamental  one — that  Labor  produces 
value.  Capital,  none.  "Hence,"  says  the  socialist,  "capitalists 
are  parasites,  if  not  robbers."  The  truth  is,  that  Labor  and 
Capital,  cooperating  on  and  with  Nature,  transform  raw  mate- 
rials into  consumable  goods  and  transport  them  to  consimiers. 


6  WILLIAM  WATTS  FOLWELL 

Whether  value  shall  be  attributed  to  them,  and  price  appear, 
will  depend  on  what  happens  in  the  market.  If  nobody  wants 
the  goods,  the  producer  only  makes  a  laughing  stock  of  him- 
self by  clamoring  about  the  labor  he  has  undergone;  and  the 
capitalist,  bewailing  a  lost  investment,  is  equally  ridiculous. 
If  a  change  of  fashion  crowds  the  market  with  buyers,  the  labor 
cost  "cuts  no  figure"  in  making  price,  as  everybody  knows. 

It  is  in  the  market  then,  and  not  in  the  field  or  the  shop, 
that  prices  are  made.  The  determination  of  "just  price"  was 
a  problem  which  allured  and  defied  theologians  of  the  Middle 
Ages.  In  vain  their  prayers,  exhortations,  and  excomnivinica- 
tions;  their  canons  and  decretals.  The  market  resisted  and  ruled. 
Legislators  have  in  many  ages  presumed  to  establish  prices 
by  statute  and  ordinance,  whether  for  commodities,  or  labor, 
or  the  use  of  capital,  mostly  to  no  purpose,  or  worse  than 
none.  Laws  may  declare  prices;  they  can  not  make  prices. 
Our  modern  usury  laws  furnish  abundant  illustration  of  this. 
Forces  mightier  than  statutes  make  prices.  These  forces  meet 
and  contend  in  the  market,  and  contending  they  cooperate. 
We  call  them,  for  shortness,  demand  and  supply. 

These  familiar  terms  are  not  always  used  in  their  proper 
sense.  By  demand  the  political  economist  means  a  body  of 
persons  appearing  in  a  market,  desiring  to  obtain  goods  or 
services  for  which  they  have  something  to  offer  in  exchange; 
by  supply,  another  company  who  offer  goods  or  services,  desir- 
ing to  receive  their  equivalent  in  exchange.  Under  a  money- 
economy,  demand  is  a  requisition  on  the  market  for  goods  or 
services  by  those  who  have  money  to  buy  with;  supply  is  the 
offer  on  the  market  of  goods  or  services  in  exchange  for  money. 
Demand  brings  money  to  take  away  goods.  Supply  brings 
goods  to  carry  off  money.  Mere  desire  or  need  of  things  does 
not  amoim.t  to  demand;  the  mere  possession  of  goods  does  not 
constitute  supply. 

The  Silverites  of  1896  insisted  that  there  is  a  imiversal  and 
unlimited  demand  for  money,  because  people  everywhere  like 
to  have  money.  Logically  they  should  have  contended  for  a 
correspondingly  universal  and  unlimited  supply  of  money.  They 
were  not  so  absurd — they  asked  only  for  some  more.  Only  those 
demand  money,  who  have  something  to  give  in  exchange  for 
money.     Demand  and  supply,  as  thus  explained,  make  prices  in 


ECONOMIC  ADDRESSES  7 

the  proper  sense  of  the  word.  A  rate,  a  stipend,  a  tariff,  may 
for  a  time  be  set  up  by  some  political  or  other  authority.  But 
let  the  matter  get  into  the  market,  and  demand  and  supply 
will  promptly  supersede  authority,  establish  economic  equa- 
tions, and  exhibit  prices  and  wages  proper. 

Price,  then,  the  market  equation  of  social  valuations,  is  the 
outcome  of  successive  and  expected  scrimmages  between  teams 
of  demanders  and  suppliers,  and  the  merchant  is  umpire  of  the 
game.  He  moderates  between  the  exalted  expectations  of  pro- 
ducers, and  the  grudging  concessions  of  consumers.  It  is  his 
fimctiom  to  ascertain  the  probable  amount  of  goods  on,  or  to 
come  on,  the  market,  and  the  probable  amount  which  con- 
sumers will  take  on  terms  satisfactory  to  producers.  The  effect 
is  to  attract  and  maintain  in  the  market  a  normal  supply  of 
all  desirable  commodities.  The  merchant  thus  plays  the  part 
of  a  prudent  ship  captain  who  husbands  the  provisions  accord- 
ing to  the  exigencies  of  the  voyage. 

The  continuous  and  perennial  performance  of  this  function 
has  resulted  in  the  establishment  of  what  is  variously  called 
"market  price,"  "customary  price,^'  "normal  price,"  or  a 
"general  level  of  prices."  Thanks  to  the  moderating  offices 
of  the  market,  producers  are  constantly  retiring  from  enter- 
prises less  remunerative,  to  engage  in  others  promising  larger 
returns,  constantly  aiming  to  supply  the  market  with  desired 
goods  in  such  quantities  as  will  yield  the  highest  profit.  The 
market  thus  becomes  an  economic  balancing  force.  It  con- 
tinually directs  industry  into  ever  more  profitable  channels, 
and  at  the  same  time  warns  against  over-production  in  any 
line.     The  market  is  the  barometer  of  industry. 

The  further  and  natural  result  is  a  certain  stability  of  prices 
which,  familiar  as  it  is,  is  a  truly  wonderful  economic  phenom- 
enon. Whoever  will  examine  the  market  statistics  of  any  con- 
siderable period  for  which  they  exist,  will  be  surprised,  if,  for 
the  first  time,  he  notes  the  remarkable  uniformity  of  price  in 
any  and  all  staple  articles  of  human  use,  and  the  generally 
gradual  shifting  of  price  level.  He  will,  it  is  true,  find  epochs 
of  revolution,  but  they  are  not  frequent.  Stability  is  the  rule; 
great  and  sudden  fluctuation,  the  exception.  The  waves  of  the 
market,  like  those  of  the  ocean,  do  not  distturb  the  general  level. 


8  WILLIAM  WATTS  FOLWELL 

Every  modern  taxing  system  presumes  a  general  and  stable 
level  of  prices.     Without  that  the  burden  would  be  intolerable. 

"Stable  prices  are  a  necessary  condition  of  social  progress,"  says 
Professor  Simon  N.  Patten.* 

This  stability  of  prices  is  as  beneficent  as  it  is  wonderful. 
Without  it,  modem  great  production  and  commerce  would  be 
impossible.  With  it,  the  producer  may  plan  and  work  in  rea- 
sonable expectation  of  reward,  and  the  consumer  may  adjust 
his  expenditure  to  his  income.  The  economic  relations  of  men, 
of  associations,  and  of  states  become  rational  and  orderly. 
Indeed  the  stable  prices  of  civilized  countries  may  be  taken 
as  a  chief  mark  of  their  distinction  from  semi-civilized  and 
savage  peoples.  This  statement  just  made  in  regard  to  stabil- 
ity of  price  will  be  supported  by  any  one  present  who  has  had 
occasion  to  make  a  purchase  in  an  oriental  bazaar,  spending 
a  morning  in  higgling  and  then  paying  three  to  five  times  the 
local  price.  The  time-saving  consideration  of  prices  and  price 
uniformity  is  of  immense  importance.  "Money,"  said  Carey 
(he  should  have  said  "money  in  a  market")  "saves  millions  of 
billions  of  minutes."  With  good  reason,  then,  does  the  daily 
newspaper  give  its  page  to  market  reports;  the  weekly  and 
monthly  trade  journals  condense  and  compare  the  daily  figures; 
and  annual  and  decennial  quartos  tabulate  and  stmi  up  for 
their  respective  periods. 

I  have  thought  it  worth  while  to  trace  the  development  of 
the  petty  fair  of  the  full  moon  into  the  great  world  market  of 
modern  times,  and  the  transformation  of  the  primeval  huck- 
ster into  the  resident  merchant.  I  have  not  described,  and  can 
not,  the  vast  apparatus  for  packing,  storing,  and  transporting 
the  countless  millions  of  tons  of  merchandise  constantly  appear- 
ing on  the  market,  nor  of  the  monetary  and  credit  facilities 
indispensable  to  trade. 

These  taken  with  market  transactions,  constitute  business, 
as  distinguished  from  industry.  It  is  with  business  that  we  are 
just  now  concerned.  We  need  not  seriously  entertain  the  con- 
tention formerly  heard  in  certain  political  discussions — that  the 
middleman  is  superfluous  and  ought  to  be  eliminated.  We 
have  been  arguing  and,  I  trust  are  agreed,  that  the  middleman 
is   an   indispensable   social    agent,    without   whom   civilization 


ECONOMIC  ADDRESSES  9 

wotild  be  impossible.     We  can  not,  therefore,  consent  to  abol- 
ish the  trader.     Let  socialists  do  that. 

But  it  will  be  said,  the  business  man  is  a  bad  man,  and  needs 
reformation.  This  is  no  new  insinuation.  The  records  of 
antiquity  are  full  of  testimony  to  his  ill-repute.  "The  Persians," 
says  Herodotus,^  "held  trade  in  extreme  contempt.  Shops  were 
not  allowed  in  public  parts  of  towns.  Only  the  lowest  of  people 
were  traders."  A  Greek  prince  might  be  a  carpenter  but  not 
a  merchant;  a  pirate  was  much  more  reputable.®  Aristotle  held 
trading  and  usury  alike  in  great  contempt,  and  advised  that 
traders  ^be  compelled  to  reside  and  do  their  business  in  a  special 
forum,  separate  from  that  in  which  the  public  assemblies  were 
held.'  Spite  of  the  fact  that  a  strong  mercantile  class  existed 
among  the  Romans,  that  people  had  no  higher  appreciation  of 
it  than  had  the  Greeks.  Cicero  declared  the  gains  of  mer- 
chants to  be  mean  and  illiberal — and  merchandising  itself  a 
badge  of  slavery.^ 

"Those  who  buy  to  sell  again  as  soon  as  they  can  are  to  be  accounted 
as  vulgar;  for  they  make  no  profit  except  by  a  certain  amount  of  false- 
hood. .  .  .  Commerce,  if  on  a  small  scale,  is  to  be  regarded  as  vulgar; 
but  if  large,  importing  much  from  all  quarters,  and  making  extensive 
sales  without  fraud,  it  is  not  so  very  discreditable." 

The  Hebrew  prophet,  Hosea,^  voices  the  judgment  of  his 
people  and  day:  "He  is  a  merchant;  the  balances  of  deceit 
are  in  his  hand;  he  loveth  to  oppress."  And  another  Hebrew 
prophet,  Amos,^"  denounces  those  who  make  "the  ephah  small 
and  the  shekel  great"  and  falsify  "balances  by  deceit,"  so  as  to 
"buy  the  poor  for  silver  and  the  needy  for  a  pair  of  shoes." 
When  Jesus  drove  out  the  buyers  and  sellers  from  the  temple, 
and  overt  tuned  the  tables  of  the  money-changers.  He  declared 
to  them  that  they  had  made  the  house  of  prayer  a  den  of  thieves. 
English  "society"  still  shuts  its  door  to  all  who  live  by  trade. 

Such  extreme  denunciations  as  these  are  rarely  if  ever  heard 
in  modern  times ;  but  is  it  not  true  that  society  is  permeated  with 
a  feeling  that  commercial  success  and  strict  integrity  are  hardly 
compatible?  Is  not  the  trader  expected  to  be  "sharp"  to  the 
verge  of  falsehood  and  fraud  ?  This  is  certainly  an  awful  arraign- 
ment. It  squarely  raises  the  "question  involved  in  the  topic 
assigned  us  for  to-night's  discussion — "The  Ethics  of  Business." 


10  WILLIAM  WATTS  FOLWELL 

Ethics  is  a  name  of  Greek  derivation,  for  one  of  the  oldest 
of  sciences, — the  science  of  conduct,  closely  allied  to  law, — 
the  other  side  of  law  in  fact, — which  early  became  a  study  by 
civilized  men.  Hindoo,  Hebrew,  Egyptian,  Greek  thinkers,  to 
their  great  credit,  inquired  into  sanctions  of  conduct  and  sought 
for  guiding  principles  of  life.  Middle- Age  schoolmen  kept 
up  the  quest,  and  handed  it  on  to  modern  philosophers,  who, 
divided  into  opposing  camps,  are  still  bombarding  one  another 
with  a  fury  akin  to  that  of  contending  religionists.  Intuitionists 
clash  with  empiricists,  hedonists  oppose  themselves  to  ration- 
alists, and  evolutionary  utilitarians  draw  the  fire  of  all  parties 
with  unwelcome  propositions  of  compromise. 

Happily  for  our  purpose  we  have  not  to  arbitrate  nor  com- 
pose the  perennial  contentions  of  moral  philosophers.  All 
schools  agree  in  these  three  things:  (1)  that  all  human 
beings  do  form  judgments  as  to  conduct;  (2)  that  they  are  con- 
strained yy  feeling  to  govern  conduct  according  to  such  judg- 
ments; (3)  that  they  do  so  govern  conduct.  All  further  consent 
that  men  know  that  they  do  these  three  things.  All  developed 
languages  have  a  word  which  comprehends  and  connotes  the 
three.  In  English  it  is  the  word  Conscience.  It  is  a  comfort- 
ably elastic  term  perfectly  suited  to  the  every-day  use  of  the 
wayfaring  man,  and  worries  nobody  but  philosophers.  To  re- 
peat— the  essence  of  conscience  is  (1)  conscious  judgment  as  to 
conduct;  (2)  the  rising  of  the  appropriate  emotion;  (3)  the  reso- 
lution of  wHl  to  do  the  thing  which  ought  to  be  done,  or  leave 
undone  the  thing  which  ought  not  to  be  done. 

At  the  risk  of  tedium  it  is  important  to  remark  that  the  word 
conduct  has  no  practical  meaning  for  the  individual  man.  The 
preposition  "con"  suggests  the  social  man.  Conduct  is  the 
guidance  of  human  action  in  mutual  "life  and  conversation." 
Our  actions  on  things  without  life,  have  no  moral  quality. 
There  is  no  right  or  wrong  in  physics  or  chemistry.  Towards 
men,  all  actions  have  an  ethical  aspect,  for  we  live  and  move 
and  have  our  being  in  social  groups. 

The  whole  world  for  all  time  has  been  a  training  ground  for 
the  practice  of  conduct.  The  moral  judgments  of  men  have 
been  embodied  in  habit  and  custom,  in  tradition  and  proverb. 
Rights  and  correlative  duties  have  been  recognized,  and  sched- 
uled, and  sanctioned  by  the  power  of  the  state.     They  form  the 


ECONOMIC  ADDRESSES  '  11 

substratum  of  law.  The  cardinal  obligations  of  men  were  graven 
by  the  Divine  Finger  on  imperishable  stone,  and  published  to 
Israel,  not  as  just,  because  commanded ;  but  commanded,  because 
just.  All  these — tradition,  the  law,  the  decalogue,  witness  to 
the  moral  law  written  forever  in  the  hearts  of  men. 

Rarely  has  it  been  suggested  that  any  man  or  class  ought  to 
be  exempt  from  this  law.  Machiavelli  proposed  that  the 
prince"  as  the  head  of  the  state,  should  be  free  to  do  wrong  if 
the  interests  of  the  state  seemed  to  require;  and  Machiavelli 
is  infamous.  Napoleon  claimed  to  be  an  exceptional  character, 
free  from  moral  constraint — and  the  claim  has  not  added  to 
that  chieftain's  glory. ^^  I  have  never  heard  it  claimed  that  the 
mercantile  class  ought  to  be  set  apart  and  permitted  to  regulate 
conduct  on  exceptional  principles.  To  the  credit  of  that  class 
it  must  be  said  it  has  never  claimed  exemption.  The  veriest 
cheat  who  ever  sanded  sugar  or  palmed  off  the  wooden  nutmeg 
has  had  his  extenuation  ready. 

The  much  derided  milkman  is  by  no  means  without  conscience,  as 
■witness  this  from  Harper's  Bazar:  "James,"  said  the  milkman  to  his  new 
boy,  "d'ye  see  what  I'm  doin'  of?"  "Yes  sir,"  replied  James,  "you're 
a-pourin'  water  in  the  milk."  "No,  I'm  not,  James,  I'm  a-pourin'  milk 
in  the  water.  So,  if  anybody  asks  you  if  I  put  water  in  my  milk,  you 
tell  'em,  'No.'     Allers  stick  to  the  truth,  James." 

There  is  a  profound  if  recondite  truth  in  the  French  proverb,  "Qui 
s'excuse,  s'accuse."  He  who  excuses  himself,  accuses  himself.  Any 
apologist  confesses. 

Many  an  amiable  shopkeeper  justifies  himself  in  floriated 
and  extravagant  advertisements  by  a  feeling  that  somehow,  in 
Paddy's  happy  phrase,  "the  truth  don't  fit."  Whether  the  trad- 
ing class  has  any  notable  eminence  in  departures  from  rectitude 
is  a  question  for  the  jury — and  this  audience  may,  if  it  so  please, 
take  that  part.  My  counsel  is  to  deliberate  patiently  before 
declaring  your  verdict. 

We  shall  do  well  if  we  remind  ourselves  at  once  of  certain 
cautions  to  be  observed  when  we  come  to  forming  moral  judg- 
ments. Voluntary  actions  only,  as  already  suggested,  come 
within  the  sphere  of  ethics.  No  one  can  be  held  responsible  for 
action  which  is  enforced,  or  prompted  by  insane  delusion. 
Allowance  has  always  to  be  made  for  pardonable  ignorance, 
for  surprise,  for  overmastering  temptation,  and  for  bad  educa- 
tion and  example. 


12  WILLIAM  WATTS  FOLWELL 

The  trader  occupies  an  exposed  and  critical  position.  A 
little  while  ago  I  spoke  of  him  as  the  umpire  in  a  game  of 
exchanges,  played  by  producer  and  consumer.  That  statement 
needs  correction.  The  trader  is  not  a  disinterested  moderator 
of  the  sport ;  he  has  a  deep  interest  in  the  game,  and  it  is  adverse 
to  those  of  both  parties.  He  gains  on  one  hand  by  lowering 
price  to  the  producer,  and  on  the  other  by  raising  it  on  the 
consumer.  He  thus  stands  a  good  chance  of  getting  the  ill- 
will  of  both.  As  an  intermediary  proprietor  he  must  assure 
himself  of  the  measure  and  quality  of  goods  acquired,  and 
stand  responsible  to  customers  to  deliver  what  he  has  bargained 
to  them.  It  is  not  always  the  merchant's  fault  that  shoddy  and 
brummagem  are  brought  to  market.  He  may  of  course  con- 
nive in  the  fraud.  Herbert  Spencer's  fearful  catalogue  of  ras- 
cality in  his  essay  on  The  Morals  of  Trade  is  chiefly  devoted  to 
an  enumeration  of  the  shams  and  adulterations  prepared  by 
manufacttirers  in  the  expectation  that  traders  of  easy  virtue 
will  work  *them  off  on  a  public  which  prefers  cheapness  to 
honest  goods.^^ 

The  merchant's  calling  is  indeed  a  precarious  one.  The 
shrewdest  natural  talent  for  merchandizing,  exercised  with  un- 
sleeping vigilance,  does  not  suffice  to  avert  losses  and  even 
collapse.  He  must  expect,  and  so  far  as  possible,  provide 
against  loss  from  undue  extensions  of  credit,  from  sudden 
avalanches  of  goods  onto  the  market,  from  freaks  of  fashion 
which  may  leave  shelving  and  storage  crammed  with  valueless 
stuffs,  from  the  irruption  of  new  competitors,  from  the  under- 
selling of  piratical  "combines,"  and  from  distiirbances  in  the 
money  market,  arising  in  distant  cities,  and  possibly,  in  foreign 
lands.  We  count  those  men  of  business  fortunate,  who  out- 
ride the  waves  of  one  of  our  great  periodic  commercial  crises. 

I  can  not  believe  the  oft-repeated  estimate,  that  ninety- 
five  or  ninety-six  out  of  every  one  hundred  men  who  engage  in 
business,  fail,  to  be  anywhere  near  the  truth.  It  is,  however, 
the  exaggeration  of  a  truth,  that  some  large  proportion  does 
succumb  to  the  risks  of  trade.  Modem  bankruptcy  laws  indi- 
cate a  public  opinion  that  business  failures  must  be  numerous, 
are  inevitable,  and  are  not  generally  due  to  dishonesty.  From 
all  this  it  is  to  be  inferred  that  if  the  trading  class  is  less  honest 
than  others,  it  is  to  mighty  little  profit.     On  the  main  question 


ECONOMIC  ADDRESSES  13 

David  Harum  would  do  well  to  preserve  a  discreet  silence,  and' 
the  manvifacturers  of  oleomargarine,  filled  cheese,  and  mixed  flour 
had  better  throw  no  stones.     It  might  turn  out  that  the  mer- 
chant merely  improves  his  more  frequent  and  insidious  oppor- 
tunities for  crookedness. 

•And  the  newspaper  man,  breaking  a  commandment  of  the  Decalogue 
and  a  statute  of  the  state  more  than  fifty  times  a  year,  has  he  any  good 
ground  from  which  to  arraign  his  neighbor  for  sharp  practice  in  trade? 

The  newspaper  man,  I  am  bound  to  add,  by  the  way,  has  an  apolo- 
gist in  the  person  of  a  near  relative  of  Mr.  Dooley,  the  well-known  Chicago 
saloon  keeper  who  has  lately  enriched  the  literature  of  American  humor. 
Says  this  unknown  apologist  of  the  much-maligned  newspaper  man, 
"Shaughnessy,  I'm  ashamed  of  your  stupidity.  Do  youse  not  know 
that  the  newspaper  man  is  both  seduced  and  intimidated.  It's  foorced 
he  is  by  an  irresistible  public  demand,  including  reverend  clergy  and 
ruling  elders  and  by  pew-holders  galore  who  would  reduce  the  whole 
printing  office  to  original  molecules  if  they  couldn't  get  their  fill  of  Sunday 
advertising.  The  Christian  publisher  is  foorced  to  get  out  the  Sunday 
edition,  to  prevent  the  devil  from  occupying  the  whole  field.  And 
there's  the  more,  that  the  Christian  matron  must  and  will  have  the 
comic  supplement  to  keep  the  children  from  raising  ould  Gain  and  dis- 
turbing their  father  while  she  is  lingering  in  the  sanctury  wid  her  seal 
sacque  and  picture  hat.  Let  me  hear  no  more  of  yer  nonsense.  What's 
the  additional  fifteen  per  cent  and  more  of  business  profits,  but  a  just  and 
reasonable  compensation  for  the  violence  done  to  the  conscience  of  the 
poor  newspaper  man  foorced  to  go  ferninst  his  conscience?" 

This  levity  may  be  misplaced, — but  the  newspaper  man  is  entitled 
to  his  hearing  and  the  public  is  bound  to  take  its  full  share  of  responsi- 
bility for  broken  law,  if  any  there  be. 

It  was  long  a  wonder  to  me  how  a  society  permeated  with 
falsehood  and  covetousness,  could  cohere  and  remain  in  exist- 
ence. On  a  late  visit  to  one  of  our  island  possessions  I  found 
the  secret,  and  I  don't  mind . confiding  ii  to  you.  It  is  this: 
where  everybody  lies,  nobody  is  deceived.  I  might  have  learned 
the  same  lesson  nearer  home.  A  New  York  City  statesman 
remarked  that  he  could  not  understand  the  old  story  about 
Diogenes  hunting  around  with  a  lantern  for  an  honest  man. 
"Are  you  surprised  that  honest  men  were  so  scarce  in  Athens?" 
he  was  asked.  "Naw.  Wat  I  don't  see  is,  w'at  he  wanted 
wit  'im." 

A  merchant  of  Rhodes  held  the  whole  remaining  stock  of 
wheat  there  and  the  price  had  been  forced  to  an  enormous 
figure.     He  alone  knew  that  in  three  days  vessels  would  arrive 


14  WILLIAM  WATTS  FOLWELL 

from  Alexandria  with  full  cargoes.  Query :  What  was  his  duty  ? 
Was  it  to  reveal  his  knowledge  and  sell  his  com  at  the  ordinary 
price  ?  Cicero,  the  heathen,  says  "Yes" ;  certain  Christian  philos- 
ophers  have   answered  "No." 

"In  my  opinion  then  .  .  .  the  corn  merchant  at  Rhodes  .  .  . 
ought  not  to  have  kept  his  buyers  in  the  dark.  As  to  silence  being  no 
concealment,  it  becomes  so,  if  for  your  own  profit  you  keep  others  in  the 
dark  as  to  things  that  you  know,  and  at  the  same  time  concern  them  to 
know."'*  The  high-minded  heathen  adds  in  the  next  chapter,  "Now  can 
there  be  doubt  of  the  nature  of  concealments  of  this  sort,  and  of  the 
character  of  those  who  practice  them?  They  surely  are  not  consistent 
with  that  of  an  open,  well-meaning,  generous,  honest,  worthy  man;  but 
of  the  crafty,  the  sneaking,  cunning,  deceitful,  wicked,  sly,  juggling, 
and  roguish." 

For  my  part  I  side  with  the  Roman  for  the  reason  that  the 
man  should  outweigh  the  merchant.  But  I  meant  to  give  only 
a  single  illustration  of  the  awful  strain  put  upon  a  trader.  The 
merchant  n|ay  well  say  a  loud  amen  to  the  prayer,  "Lead  us 
not  into  temptation." 

We  have  now  unconsciously  drifted  to  the  position  that  the 
business  class,  all  things  considered  and  allowed,  is  no  better 
and  no  worse  in  point  of  morality  than  the  rest  of  us.  But  I 
think  it  but  justice  to  add  that  it  is  among  bankers  and  mer- 
chants in  the  great  centers  of  business  where  a  nod  nails  a  con- 
tract for  millions,  that  the  most  glorious  illustrations  of  integrity, 
fair  dealing,  and  honor  which  this  world  knows,  are  to  be  found. 

"Perhaps  there  are  no  two  men  living  in  the  world  to-day  who 
would  make  an  oral  contract  involving  a  billion  dollars  except  J.  Pierpont 
Morgan  and  Andrew  Carnegie.  These  spirits,  each  courageous,  daring, 
confident,  entered  into  such  a  contract."  The  necessary  papers  were  not 
executed  till  some  days  after.'* 

As  to  the  morals  of  general  society,  there  is  room  for  dis- 
crimination between  the  statements  of  political  speakers  and 
religious  teachers.  The  stump  orator,  bowing  to  the  "majesty 
of  the  people,"  never  tires  of  assuring  them  that  they  are  wise, 
incorruptible,  and  capable  of  deciding  all  questions  of  state. 
The  preacher,  magnifying  his  office,  and  desirous  to  show  us 
our  true  "state  and  standing  in  the  world,"  assails  our  reluc- 
tant ears  with  such  passages  as,  "there  are  none  righteous,  no, 
not  one;"  we  are  all  gone  out  of  the  way;  sinners  by  nature  and 
more  so  by  practice,   "there  is  no  health  in  us."     Neither  the 


ECONOMIC  ADDRESSES  15 

preacher  nor  the  politician  expects  his  statements  to  be  taken 
in  their  bald  literalness,  and  we  certainly  do  not  so  take  them. 
StUl  we  do  well  to  trust  the  demagogue  so  far  as  he  expects  us 
to,  and  to  give  heed  to  the  warnings  of  the  preacher,  even  if  we 
do  not  believe  in  total  depravity. 

The  problem  of  moralizing  business  then,  is  but  part  of  the 
larger  problem  of  moralizing  general  society.  Trite  and  hack- 
neyed as  the  word  is,  I  can  find  no  other  which  comprehends 
all  means  of  solving  both  the  greater  problem  and  the  less  than 
the  word  education — education  in  schools,  in  the  family,  and  the 
social  circle,  by  law  and  by  gospel,  by  history  and  biography, 
and  by  the  example  of  living  men.  Turning  to  the  smaller 
problem,  that  of  moralizing  business,  it  is  important  to  note 
how  tardy  the  business  world  has  been  to  call  for  the  assistance 
of  the  teacher  and  school.  The  physician  and  the  lawyer  long 
ago  made  their  standing  in  the  learned  world.  The  chemist 
and  the  engineer  have  won  their  citizenship  in  the  republic  of 
learning.  The  farmer  has  got  his  foot  over  the  threshold.  But 
the  man  of  business  has  raised  no  clamor  for  more  light  and 
more  science  in  our  country.  I  have  nothing  to  say  which 
might  discourage  the  business  schools  or  colleges  already  found 
in  all  our  considerable  towns.  They  are  doing  a  useful  service 
and  have  won  their  way  with  little  sympathy,  and  often  against 
the  resistance  of  the  merchants.  But  there  is  need  of  a  higher 
and  wider  schooling  than  they  have  yet  aspired  to  give.  They 
are  concerned  with  the  mere  tricks  of  trade — with  the  mechan- 
ical routine  of  the  counting  room,  the  warehouse,  and  the  bank. 
The  business  college  itself  calls  for,  and  society  needs,  a  more 
generous  education, — one  which  opens  out  on  the  great  world, 
past,  present,  and  future,  which  shall  develop  and  train  the 
intellectual  powers,  and  inform  and  inspire  the  moral  faculty. 
There  is  no  reason  why  the  merchant  should  not  hold  up  his 
head  with  all  learned  doctors. 

Here  I  need  not  argue.  Already  a  few  of  our  more  enter- 
prising universities  have  opened  their  doors  to  the  higher  com- 
mercial education.  The  fashion  will  spread,  and  we  shall  pres- 
ently get  the  hang  of  the  new  pedagogy.  A  recent  gift  to  one 
of  these  institutions  was  made  with  a  condition  that  business 
honor  and  morality  shall  be  illustrated  and  inculcated.  In  the 
next  generation  we  shotdd  have  a  body  of  business  men  trained 


16  WILLIAM  WATTS  FOLWELL 

in  languages  and  history,  in  geometry  and  many  sciences,  in 
political  econom3%  in  transportation  and  public  finance,  and 
in  business  law.  The  Germans  have  been  for  some  years  train- 
ing yotmg  men  for  world-business,  and  the  graduates  of  their 
schools  are  called  to  London  and  New  York  to  fill  high  positions 
in  great  houses.  May  we  not  rightly  expect  at  length  to  find 
in  the  market  greater  wisdom  and  a  higher  moral  tone?  Men 
trained  in  the  schools  I  hope  for,  will  know  that  fraud  does 
not  pay  and  honesty  is  something  else  than  a  policy. 

Meantime  there  are  betterments  of  trade  morals  going  on, 
which  are  both  a  cause  and  a  consequence  of  trade  customs. 
The  one-price  plan,  may  be  mentioned,  which  places  all  cus- 
tomers on  an  equality.  In  my  boyhood  the  making  of  ordi- 
nar\'  purchases  at  a  store  was  called  "trading."  The  customer 
expected  to  haggle,  and  hoped  to  get  a  lower  price  than  his 
neighbor.  The  adroit  salesman  coimted  for  much  in  those 
times.  THi  custom  of  wholesaleing  by  samples  shown  by  com- 
mercial travelers,  speaks  loudly  for  the  int^rity  of  merchants. 
Goods  so  sold  rarely,  unless  by  some  accident,  fail  to  correspond 
to  the  samples.  The  extended  use  of  trade  marks  and  brands 
gives  confidence  to  consumers,  and  encourages  honest  manu- 
facture. The  Pillsbur\-s  could  not  afford  to  market  a  single 
barrel  of  the  "Best"  flour  not  up  to  standard.  The  \-irtue  of 
manufacturers  and  dealers  in  goods  marketed  in  cans  and  car- 
tons has  been  greatly  supported  by  the  piire  food  laws  enacted 
in  late  years.  What  a  commentary.'  on  our  Christian  ci\Tliza- 
tion  that  such  laws  are  necessary!  The  pubHc  grading  of  grain, 
meats,  and  dair\'  products  makes  for  good  morals  in  business. 
Ought  not  all  staples  of  constunption  to  be  standardized  imder 
pubhc  inspection?  All  such  customs  are  moralizing.  There  is 
great  need  of  reform  in  advertising,  especially  in  print,  which 
costs  the  American  constuner  so  many  hundreds  of  millions  a 
year,  and  the  government  a  good  round  sum  for  virtually  free 
postal  distribution.  It  is  but  just  to  say  that  there  has  been 
great  reform,  but  there  is  room  for  more. 

We  need  not  pursue  the  special  education  of  the  business 
class.  That  will  at  length  take  care  of  itself.  Meantime  the 
general  moralization  of  all  classes  must  go  on,  and  serve  as  an 
atmosphere  in  which  the  moral  improvement  of  2inx  class  may  be 
possible.     Here  comes  the  amiable  socialist  to  say  that  the  moral- 


ECONOMIC  ADDRESSES  17 

ization  of  general  society  is  impossible  where  competition  exists. 
Only  in  the  coUectivistic  state,  where  there  will  be  no  buying 
and  selling,  where  profit  will  be  impossible,  where  private  owner- 
ship will  be  so  curtailed  that  nobody  will  be  covetous,  and 
where  greed  must  shrivel  and  vanish,  can  men  be  truly  moral 
in  their  economic  relations.  I  blame  no  socialist  for  his  dream 
and  longing  for  a  heaven  on  earth.  If  we  could  be  sure  that 
Socialism  could  perform  a  tithe  of  what  it  promises  we  should 
be  without  excuse  if  we  did  not  vote  it  in  to-morrow.  But  the 
doul?t  about  that  and  the  certainty  that  no  great  state  will  or 
can  undertake  the  experiment  of  state  socialism,  within  any 
period  which  can  be  estimated,  may  justify  us  in  politely  shut- 
ting the  door  on  the  seductive  Marxian,  "charm  he  never  so 
wisely."  We  must  grind  along  in  the  old  rut  of  individualism, 
moderated  by  social  control,  and  I  suspect  that  our  ethics  will 
be  of  a  robuster  sort  than  that  of  a  coUectivistic  state  from' 
which  the  struggle  for  existence  would  be  mostly  eliminated. 

Next  comes  the  churchman  to  claim  his  immemorial  right  to 
educate.  There  is  no  genuine  morality,  he  claims,  unless  foimd- 
ed  on  the  orthodox  faith  and  sanctioned  by  penalties  reserved 
in  a  future  world.  The  moral  education,  he  contends,  is  of  such 
overwhelming  importance  that  the  subordinate  intellectual  train- 
ing ought  not  to  be  separated  from  it,  and  both  should  be  under 
ecclesiastical  direction.  There  are  many  who  hold  to  this 
tradition.  To  the  churchman,  as  to  the  socialist  we  are  obliged 
to  say  "We  can  not  wait  for  you.  The  triumphant  unity  and 
purification  of  the  ch\irch  is  too  far  away.  Meantime  internal 
dissension  exhausts  her  powers  and  disenables  her  from  the 
task  of  educating  the  whole  people." 

And  there  are  those  who  traverse  the  plea  of  the  church  and 
allege  that  moral,  as  well  as  intellectual,  training  can  be  more 
effectively  given  on  the  foundations  of  science  and  experience, 
than  on  that  of  any  religion.  However  that  may  be,  general 
society  which  has  undertaken  the  education  of  the  intellect,  will 
be  constrained  to  essay  that  of  the  conscience.  We  may  resent 
the  claim  of  the  ecclesiastic  that  he  alone  should  be  entrusted 
with  the  training  of  our  children,  and  at  the  same  time  concede 
his  major  premise  that  training  in  morals  must  go  on  along  with 
secular  instruction.  The  truth  is,  the  two  are  inseparable. 
Every  schoolroom  is  a  fonmi  in  which  conduct  is  illustrated. 


18  WILLIAM  WATTS  FOLWELL 

No  teacher  can  help  being  a  guide  of  life  to  his  pupils.  I  must 
not  fail  here  to  commend  for  the  instruction  of  young  school 
pupils  the  book  of  the  late  President  Emerson  E.  White,  espe- 
cially Part  Two  entitled  Moral  Training.  Also  the  book  of 
Dr.  Felix  Adler  on  Moral  Instruction.  For  grown-up  students 
and  all  adults  Cicero's  treatise  entitled  De  Officiis  has  not  been 
surpassed.  It  was  wTitten  for  his  son  when  a  university  student 
at  Athens.  Translations  are  plentiful.  That  of  Dr.  Peabody 
of  Harvard  is  excellent. 

It  is  perfectly  practicable  for  the  teacher,  without  trenching 
on  sectarian  preserv^es,  to  expound  and  illtistrate  the  conduct 
which  is  noble  and  just,  and  show  how  character  is  built  up  by 
good  habits.  What  is  more,  he  may  constantly  reinforce  con- 
science by  alliance  with  taste,  our  aesthetic  natvire, — and  thus 
demonstrate  "the  beauty  of  holiness."  The  daily  walk  and  con- 
versation of  every  teacher  should  be  a  continuous  object  lesson, 
more  effective  than  any  preachment  of  those  cardinal  virtues 
scheduled  by  Plato,  and  inculcated  by  every  moral  philosopher 
who  has  since  lived:  Temperance,  Courage,  Kindness,  Wisdom, 
Justice. 

In  a  democracy  there  is  no  education  of  so  great  importance 
as  that  which  leads  to  the  recognition  of  rights,  and  of  the  duties 
which  of  necessity  correspond  to  rights.  The  concession  of 
rights  and  the  discharge  of  duties  form,  if  not  the  whole  of  con- 
duct, one  half  or  one  third  of  it.  I  have  long  been  of  the  opin- 
ion that  excellent  moral  instruction  can  be  given  out  of  our 
civil  penal  codes.  The  youngest  child  in  the  grammar  school 
can  be  taught  what  courses  of  conduct  the  law  denounces  as 
crimes  or  misdemeanors,  and  why  the  state  has  provided  punish- 
ments for  them.  The  school  master  need  by  no  means  confine 
himself  to  the  criminal  law;  the  civil  law  abounds  in  material 
for  his  use  in  teaching  right  conduct.  Let  us  take  two  illustra- 
tions. The  first  shall  be  that  law  of  the  person  which  guarantees 
to  every  American  citizen  the  dearest  of  his  rights — the  right  of 
personal  liberty.  I  mean  the  "Habeas  Corpus  Act"  as  the 
English  term  it,  which  defines  and  sanctions  "the  privilege  of 
the  vmX.  of  Habeas  Corpus."  Under  this  law  any  person  who 
is  restrained  of  his  liberty  may  apply  to  the  covirts  for  an  im- 
mediate inquiry  into  the  reasons  for  his  detention.  If  none  is 
foimd,  the  applicant  is  entitled  to  immediate  release.     A  heavy 


ECONOMIC  ADDRESSES  19 

penalty  awaits  judge  or  sheriff  who  fails  in  his  duty.  Without 
this  right  of  "summary  appeal  for  immediate  deliverance  from 
illegal  imprisonment,"  our  bills  of  rights  would  be  waste  paper. 

The  Minnesota  Habeas  Corpus  Statute  forms  Chapter  81  of  the 
General  Statutes  of  1913.     The  essential  provisions  are: 

Every  person  imprisoned  or  otherwise  restrained  of  his  liberty, 
(except  persons  duly  committed  or  convicted)  may  prosecute  a  writ  of 
Habeas  Corpus. 

The  form  of  the  writ  is: 

The  State  of  Minnesota  to  the  sheriff  of  etc. 

You  are  hereby  commanded  to  have  the  body  (habeas  corpus  it  was 
in  old  law  Latin),  of  CD.  by  you  imprisoned  and  detained,  as  it  is  said, 
....   by  whatsoever  name  the  said  CD.  shall  be  called  or  charged, 

before judge  of  the court,  at on 

the day  of to  do  and  receive  what  shall  be  then  and 

there  considered  concerning  the  said  CD.  And  have  you  then  and  there 
this  writ.     Witness  etc. 

The  penalty  for  wilful  refusal  by  a  judge  to  grant  the  writ  when 
legally  applied  for  is  $1',000.  A  sheriff  who  refuses  or  neglects  to  produce 
CD.  and  return  the  writ  may  be  committed  to  jail  till  he  complies. 
It  is  the  duty  of  the  judge  immediately  after  return  of  a  writ  to  examine 
into  the  facts,  and  if  no  legal  cause  for  imprisonment  is  found,  to  discharge 
the  prisoner.  For  neglect  or  refusal  the  judge  is  liable  to  impeachment, 
and  upon  conviction  to  removal  from  office.  A  sheriff  or  other  officer 
neglecting  to  discharge  a  prisoner,  whose  release  has  been  ordered  is 
liable  to  a  fine  of  $1,000  and  special  damages  as  shown. 

Our  second  illustration  shall  be  "The  Statute  of  Frauds," 
found  in  the  law  of  property  of  all  our  Anglo-American  states. 
The  object  of  this  famous  statute  is  to  require  all  contracts  of 
serious  importance,  or  extending  over  considerable  periods  of 
time  to  be  committed  to  writing  and  vouched  by  signature :  so 
that  neither  party,  if  disappointed  in  his  bargain,  may  claim 
there  was  no  bargain,  or  if  there  were  one,  its  terms  were  such 
as  he  may  dictate.  In  our  day  and  country  we  are  so  wonted 
to  the  beneficent  operation  of  this  law  that  we  have  become 
unconscious  of  it.  In  proof  that  I  do  not  exaggerate  its  im- 
portance, let  me  give  the  opinion  of  that  great  American  jurist, 
Chancellor  Kent.  "The  English  Statute  of  Frauds  and  Per- 
jtiries  carries  its  influence  through  the  whole  body  of  our  juris- 
prudence, and  is  in  many  respects  the  most  comprehensive, 
salutary,  and  important  legislation  on  record,  affecting  the 
security  of  private  rights. "^^ 


20  WILLIAM  WATTS  FOLWELL 

The  Minnesota  Statute  of  Frauds  forms  Chapter  68  of  the  General 
Statutes,  1913.     The  essential  provisions  are: 

1.  All  conveyances  of  land  real  estate  must  be  by  deed  in   writing. 

2.  Contracts  for  the  sale  of  personal  property  are  void,  unless 

a.  In  writing  signed  by  the  party  charged, 

b.  Or  goods  delivered  in  whole  or  part, 

c.  Or  purchase  money  paid  in  whole  or  part. 

3.  There  are  certain  oral  agreements  which  are  not    declared   void, 
but  for  which  no  prosecutions  are  tolerated.     These  are 

a.  Agreements  running  for  more  than  one  year, 

b.  Agreements    to    answer  for  the   debt,  default,  or  doings  of 
another, 

c.  Agreements  in  consideration  of  marriage. 

Any  intelligent  boy  or  girl  of  twelve  could  grasp  the  main 
ptirposes  and  benefits  of  these  laws,  and  the  knowledge  would 
be  far  more  useful,  and  quite  as  interesting  as  the  history  of 
the  Ancient  Persians,  the  solution  of  cubic  equations,  or  the 
scanning  of  iambic  pentameters.  I  can  think  of  no  solider 
foundation  ipr  the  inculcation  of  practical  morality  than  such 
laws. 

Other  materials  there  are  in  abundance  for  the  use  of  the 
teacher  of  morals.  I  can  mention  only  literature — especially 
the  literature  of  song,  of  parable,  and  of  proverb,  all  crowned 
by  the  treasures  of  the  English  Bible.  I  trust  that  we  have 
kept  in  mind  the  truth  that  morality  is  not  a  matter  of  the 
heart  alone — that  it  takes  right  knowing  to  awaken  the  right 
feeling  which  in  turn  can  rouse  right  willing. 

There  is  another  education  of  the  whole  society  most  neces- 
sary— an  economic  education.  I  am  not  about  to  recommend 
that  political  economy  be  introduced  into  our  common  and 
graded  schools.  That  may  wait  till  political  economists  come 
to  an  agreement  as  to  what  that  science  embraces,  and  I  sus- 
pect that  agreement  will  have  the  same  date  as  the  complete 
unification  of  theologians  as  to  the  content  of  the  orthodox 
faith.  No,  I  mean  something  simpler,  and  practical — an  eco- 
nomic training  of  children  in  both  school  and  family.  Our  chil- 
dren should  be  early  taught  the  qualities  and  merits  of  eco- 
nomic goods,  of  houses  and  their  furniture,  of  domestic  animals, 
of  clothing,  foods,  and  merchandise  of  many  kinds.  They 
should  learn  to  distinguish  the  genuine  from  the  spurious,  the 
tasteful  from  the  tawdry.  They  should  be  entrusted  with 
money  and  sent  to  the  market  to  buy,  and  encouraged  to  form 


ECONOMIC  ADDRESSES  21 

sound  opinions  as  to  prices.  Fortunate  are  those  children  whose 
parents  can  give  them  opportunity  to  earn  money  by  labor. 
The  boy  who  has  earned  a  dollar  by  the  sweat  of  the  brow  has 
a  sense  of  value  and  utility  impossible  to  the  one  who  has  not 
labored.  The  man  who  has  not  labored  has  not  been  educated 
and  knows  neither  himself  nor  the  world. 

All  children  should  be  taught  to  postpone  the  good  of  to- 
day for  the  better  of  to-morrow.  They  should  be  trained  to 
the  saving  habit,  and  to  make  it  a  matter  of  conscience  to  pro- 
vide against  the  rainy  day,  against  old  age,  and  possible  earlier 
incapacity  for  work.  The  postal  savings  banks  now  being 
established  contribute  to  the  economic  education  we  are  con- 
sidering. Abstinence  from  useless  and  injurious  luxuries  shoiild 
be  inculcated  in  every  family  and  every  school.  Thanks  to  a 
crusade  preached  by  a  body  of  brave  earnest  women,  the  laws  of 
many  states  already  require  instruction  in  the  effects  of  alcohol 
on  the  human  system.  We  are  still  concerned  with  the  eco- 
nomics of  a  species  of  luxurious  consumption  which  costs  the 
country  much  more  than  a  billion  dollars  a  year,  with  nothing 
substantial  to  show  for  it.  Shall  we  include  in  our  scheme  absti- 
nence from  tobacco  and  other  narcotics  ?  Logically  we  ought  to, 
but  what  is  the  use  of  preaching  when  the  public  men  of  the 
country  neutralize  it  all  by  their  example?  I  have  long  been 
accustomed  to  say  to  my  men  students:  Smoke  tobacco  if  you 
like  it  and  think  it  shows  you  manly.  I  have  so  far  shunned 
the  habit,  but  I  can  not  believe  the  practice  wholesome  or 
cleanly.  But  please  yourselves;  I  have  no  sermon  to  preach 
to  you,  so  long  as  the  governor  of  the  state,  the  bishop  of  the 
diocese,  and  the  president  of  the  university  set  you  the  example. 

Nevertheless  the  General  Statutes  of  Minnesota  under  the 
head  of  "Crimes  against  morality,  decency,  etc.,"  provide  that 
every  school  pupil  under  age  who  shall  smoke  or  use  cigars, 
cigarettes,  or  tobacco  in  any  form  in  any  public  place  shall  be 
guilty  of  a  misdemeanor,  and  be  punished  for  each  offense  by  a 
fine  of  not  more  than  ten  dollars,  or  by  imprisonment  in  the 
county  jail  for  not  more  than  five  days.  And  any  person  who 
furnishes  a  minor  pupil  with  tobacco  in  any  form  is  guilty  of  a 
misdemeanor,  and  may  be  punished  by  a  fine  of  fifty  dollars  or 
thirty  days  imprisonment.^ '^ 


22  WILLIAM  WATTS  FOLWELL 

Finally,  the  art  of  bookkeeping  should  be  taught  to  all  along 
with  writing  and  arithmetic.  This  system  of  personal  and 
domestic  statistics  is  certainly  of  importance  to  every  member 
of  society.  The  practice  of  account-keeping  begets  frugality, 
keeps  peace  between  neighbors,  checks  extravagant  expendi- 
ture, and  keys  up  honesty  all  round.  Albert  Gallatin  thought 
a  Secretary  of  the  Treasury  would  do  well  to  understand  book- 
keeping.^* 

Such  economic  training  of  children  would  do  much  towards 
moralizing  society  and  the  market. 

But,  training  is  not  enough.  Sound  judgment  must  be 
reinforced  by  adequate  knowledge.  That  would  be  an  ideal 
market  where  large  numbers  of  demanders  and  suppliers  resort- 
ed, each  and  all  perfectly  informed  as  to  all  conditions  affect- 
ing values.  It  would  then  be  equally  impossible  to  gull  sellers 
with  suggestions  of  glut,  or  deceive  buyers  with  insinuations  of 
scarcity,  ^uch  a  market  there  has  never  been,  and  the  trader 
has  been  to  a  degree  to  blame  for  it.  The  articles  of  appren- 
ticeship in  vogue  for  centuries  have  bound  merchants  to  instruct 
their  apprentices  in  ''the  art  and  mystery"  of  merchandizing. 
The  merchant  has  ever  studied  how  to  involve  his  transactions 
in  mystery.  He  does  not  take  the  public  into  his  confidence, 
and  the  public,  apathetic  and  incurious,  remains  in  deep  igno- 
rance of  the  qualities  of  goods,  the  range  of  supply,  the  cost  of 
production,   anc^  other  conditions  which  affect  price-making. 

The  ideal  market  will,  of  course,  never  exist  on  this  planet; 
but  there  may  at  length  be  something  like  it.  Thanks  to  the 
market  reports  of  the  daily  and  periodical  press  already  men- 
tioned, we  are  on  the  way  to  it.  The  casual  newspaper  reader 
thirsting  for  "scare"  news,  little  appreciates  the  immense  social 
and  economic  importance  of  those  repulsive  pages.  As  already 
suggested,  they  contribute  towards  that  stability  of  prices  which 
is  so  great  a  desideratum.  But  market  reports  are  prepared 
and  published  in  the  interest  of  business  men.  We  need  an 
apparatus  which  at  all  seasons  shall  keep  the  whole  people  in- 
formed upon  the  state  of  industry  and  commerce  the  world 
over.  No  private  agency  can  be  trusted  with  that  eminently 
public  service.  The  call  is  for  a  great  public  economic  intelli- 
gence office,  for  the  National  Department  of  Statistics  which  is 
to  be  and  has  begun  to  be.     In  the  perfected  state  of  the  future, 


ECONOMIC  ADDRESSES  23 

when  jails  and  prisons  and  penal  codes  shall  have  become  un- 
necessary, when  wars  shall  have  ceased,  and  the  nation  can  save 
the  three  hundred  and  fifty  millions  now  annually  spent  on  war 
preparations  and  war  consequences,  the  department  of  statistics 
will  be  the  leading  one  in  the  national,  state,  and  local  govern- 
ments. When,  through  its  agency,  the  whole  people  shall  be 
promptly  and  constantly  informed  of  all  market  conditions  (so 
far  as  men  can  foresee  them),  no  trader  can  deceive  his  cus- 
tomers, no  clique  of  speculators  can  rig  the  market.  What  a 
support  to  virtue  will  such  knowledge  be! 

But  knowledge  is  not  enough.  It  must  be  crowned  with 
wisdom, — that  wisdom  which  is  better  than  the  merchandise 
of  silver  and  more  precious  than  rubies.  If  our  people  or  any 
people  are  to  attain  to  that  high  plane  of  living  where  wisdom 
is  the  principal  thing,  they  must  quench  the  wild,  insane  pas- 
sion for  riches  which  now  possesses  them  and  cease  from  mam- 
mon-worship. They  must  cease  from  envying  and  imitating 
the  insane  luxury  of  some  millionaires,  and  must  learn  that  the 
idle-rich  are  useless  and  contemptible  parasites.  We  need,  all 
of  us,  to  put  into  practice  a  truth  we  all  profess, — that  the  pos- 
session of  wealth  imposes  obligations  to  society  under  whose 
beneficent  guardianship  the  rights  of  property  are  guaranteed. 
Wealth  is  no  charter  to  prodigality,  or  idleness,  or  lust.  Sound 
political  economy  and  religion  alike  make  wealth  a  trust,  and 
its  owners,  trustees.  Slow  as  the  process  is,  we  can  and  must 
hope  for  a  day  when  our  whole  society  will  be  moralized.  Then 
the  merchant  can  no  more  say  that  it  is  impossible  to  do  busi- 
ness and  speak  truth  with  his  neighbor. 

Up  to  this  point  in  our  discussion  we  assumed  an  ordinary 
course  of  things  and  have  taken  no  note  of  the  changes  and 
chances  of  this  mortal  life.  Of  these  chances,  men  of  business 
may  not  be  so  careless.  Stationed  on  the  economic  w^atch 
towers,  they  must  be  unceasingly  alert  to  note  the  eflEects  of 
wet  and  dry;  of  heat  and  frost;  of  foes,  vegetable  and  animal, 
to  the  growing  crops  at  home  and  in  distant  continents;  of  the 
discovery  of  new  mines  and  deposits,  especially  of  the  money 
metals;  or  the  exhaustion  of  old  ones;  of  strikes  and  lockouts 
in  the  labor  field;  of  new  customs  as  to  hours  of  toil  and  limits 
on  output ;  of  pestilences  and  famines ;  of  monetary  contraction 
or  expansion,  and  commercial  crises  which  in  recent  times   are 


24  WILLIAM  WATTS  FOLWELL 

frequent  and  perhaps  periodic;  and  above  all,  of  those  changes 
of  fashion  of  which  there  is  no  science  nor  prevision.  Long  ex- 
perience and  trained  powers 'of  observation  may  enable  them  to 
estimate  the  force  and  directions  of  ordinary  winds  and  cur- 
rents and  to  trim  their  sails  accordingly.  Still,  in  all  business 
there  must  ever  remain  a  big  element  of  uncertainty.  The 
trader  must  ever  be  taking  great  risks,  and  all  right-minded 
people  will  concede  him  generous  compensation, — wages  for  his 
labor,  interest  for  his  capital,  profit  for  his  risk  and  respon- 
sibility. 

How  far  from  the  minds  of  speaker  and  audience  was  the  thought 
that  within  a  decade  our  peaceful  country  would  be  raising  an  army  of 
two  millions  of  soldiers  and  expending  twenty  billions  of  money  in  a 
single  year  of  preparation  for  a  war  on  another  continent.  The  effect 
on  business  is  too  obvious  for  remark. 

But  there  are  mingled  with  honorable  men  of  business,  those 
who  are  no^  looking  for  mere  legitimate  gains.  Such  are  not  in 
business  for  service  but  for  plunder.  We  call  them  speculators. 
This  is  a  word  of  Latin  derivation  and  from  a  root  meaning  to 
see  or  behold:  hence  to  watch  or  lie  in  wait  for.  The  figure  is 
that  of  the  eagle  who  watches  for  the  fish-hawk  rising  from  the 
water,  with  his  food,  and  swoops  down  to  rob  him.  The  specu- 
lator exists  in  many  varieties;  one  deals  in  actual  commodities 
and  gains  by  cornering  or  overloading  the  market ;  another  trades 
in  fictitious  commodities,  with  no  expectation  that  any  goods  shall 
change  hands;  still  another  capitalizes  hope  and  hot  air.  Except 
in  form — hardly  in  that — speculation  as  we  now  describe  it,  does 
not  differ  from  gambling — the  brutal,  selfish,  unsocial,  demoral- 
izing vice,  everywhere  and  always  condemned  by  right-thinking 
people.  To  get  something  for  nothing  is  a  species  of  robbery, 
even  with  the  other  party's  consent.  If  it  be  asked  here  "Can 
anybody  draw  the  line  between  legitimate  trading  and  gambling  ?" 
I  am  ready  to  answer:  As  a  matter  of  casuistry  it  is  difficult; 
it  may  be  impossible;  but,  as  a  matter  of  common  sense  and 
practice,  if  any  man  sincerely  desires  to  be  on  the  right  side  of 
the  fence,  he  need  not  lose  the  flash  of  a  fire-fly  in  getting  there. 
I  think  it  but  just,  however,  to  our  speculator  to  say  that  he 
is  often  under  awful  temptation,  when  willing  lambs  without 
number  are  waiting  to  be  shorn. 


ECONOMIC  ADDRESSES  25 

Another  assumption  has  been  tacit  in  this  discussion, — that 
competition  has  been  free,  between  man  and  man.  Such  com- 
petition we  have  assumed  to  be  essential  to  a  true  market,  in 
which  an  economic  democracy  exchanging  freely,  may  establish 
just  prices  through  the  natural  interplay  of  economic  interests. 
To  engross  or  forestall  the  market  has  always  been  a  crime;  and 
to  monopolize  it,  infamous.  It  has  been  the  policy  of  our 
American  commonwealths,  following  ancient  examples,  to  per- 
mit the  united  action  of  citizens  in  industry  and  trade  by  incor- 
poration into  single  quasi- personal  associations.  Up  to  the 
middle  of  the  nineteenth  century  such  permission  was  granted 
by  special  legislative  acts  called  charters.  When  the  railway 
and  steam  machinery  had  made  "large  production"  profitable 
in  many  lines,  the  demands  for  charters  became  so  numerous 
and  the  danger  of  granting  excessive  powers  so  great,  that 
general  corporation  laws  were  enacted.  The  privilege  of  incor- 
poration now  came  to  be  regarded  as  a  right.  With  super- 
fluous generosity,  as  I  believe,  our  states,  while  granting  liberal 
powers  to  corporations,  have  relieved  them  of  the  responsibilities 
which  individuals  and  partners  are,  and  ought  to  be,  subject  to; 
thus  giving  them  an  advantage,  which  they  have  not  been  slow 
to  turn  to  account. 

One  of  the  incidental  consequences  of  the  war  of  the  slave- 
holders' rebellion  was,  that  it  served  as  an  object  lesson  in  or- 
ganization on  a  great  scale.  The  most  conspicuous  illustration 
was  the  formation  of  "combines"  for  transportation  and  industry 
which  began  within  the  decade  after  the  war.  We  can  not  at 
this  hour  enter  upon  the  interesting  story  of  their  evolution, 
from  the  original  trust  proper  to  the  last  phase  of  the  holding 
company  and  the  merger.  We  are  only  concerned  with  the 
last  development,  the  object  of  which  is  to  guarantee  profits  by 
control  of  markets.  The  trust  has  extended  its  activity  from 
the  field  of  production  into  that  of  exchange.  Its  adventures 
are  mercantile,  not  merely  industrial.  Massing  a  sufficient 
number  of  establishments,  and  operating  on  a  scale  resulting 
in  virtual  monopoly,  the  management  undertakes  to  dictate 
prices  to  material  men,  to  impose  its  own  rates  of  wages  for 
labor,  and  to  figure  its  profits  according  to  what  the  traffic  will 
bear.  In  some  cases  the  supply  of  material  has  been  acquired 
or  brought  under  control.     In  many  cases  the  retailer,  working 


26  WILLIAM  WATTS  FOLWELL 

under  a  factor's  agreement,  is  no  better  than  a  hired  agent  with 
iron-clad  instructions.  The  question  which  concerns  us,  is  what 
is  to  be  the  effect  of  the  trust  on  the  market?  I  submit  this 
answer.  In  so  far  as  the  trust  can  estabHsh  and  maintain  a 
monopoly,  it  obliterates  the  market.  Where  there  is  but  one 
seller  who  may  dictate  prices,  there  is  no  market.  Prices  become 
rates  or  tariffs  and  assimilate  to  taxes.  There  is  no  equating 
of  social  valuations. 

It  may  be  suggested  here  that  by  reason  of  economies  in 
production  and  exchange  the  trusts  can  afford  to  undersell  pri- 
vate operators,  and  from  purely  selfish  interest  will  refrain  from 
extortion;  that  they  will  be  content  with  moderate,  because  un- 
failing, profits,  and  will  bless  the  world  with  straight  goods  and 
low  prices.  Grant  this  if  you  will,  but  note  that  in  the  absence 
of  a  market  in  which  competition  rules,  you  have  no  gauge  of 
prices.  In  the  grip  of  a  beef  trust,  how  can  you  tell  what  steaks 
and  roasts^are  worth? 

This  excerpt  from  an  Associated  Press  dispatch  may  illustrate  my 
statement:  Pittsburg,  Pennsylvania,  January  23.  "The  Standard  Oil 
Company  has  created  a  sensation  by  declaring  that  hereafter  it  will  fix 
the  daily  price  of  petroleum  regardless  of  quotations  on  the  oil  exchanges. 
.  .  .  The  principal  buyer  for  .  .  .  the  Standard  Oil  Company  has 
issued  the  following  notice:  'Buyers:  the  small  amount  of  dealings  in 
certificate  oil  on  the  exchange  renders  the  transactions  there  no  longer  a 
reliable  indication  of  the  value  of  the  product.  .  .  .  Daily  quotations 
will  be  furnished  you  from  this  ofiice.'  " 

Grant  that  all  our  "combines"  are  and  are  to  be  conducted 
by  just  and  generous  men,  ambitious  to  play  the  role  of  princely 
benefactors,  will  it  be  well  for  the  people  to  surrender  to  them 
the  making  of  prices?  In  politics  we  have  learned  by  imme- 
morial experience  that  no  one  class  can  stipulate  for  another, 
and  that  neither  monarchs  nor  oligarchs,  though  they  claim 
to  be  inspired  from  heaven,  can  be  trusted  to  rule  without  con- 
stitutional guaranties.  I  can  not  therefore  sympathize  with  the 
declaration  of  a  Christian  railroad  president  to  the  Pennsyl- 
vania coal  miners: — "The  rights  and  interests  of  the  laboring 
men  will  be  protected  and  cared  for  by  the  Christian  men  to 
whom  God  in  His  infinite  wisdom  has  given  the  control  of  the 
property  interests  of  the  country."^'  How  absurd  and  futile  is 
all  such  talk!     Does  any  sane  man  believe  that  American  la- 


ECONOMIC  ADDRESSES  27 

borers  are  going  to  place  themselves  under  the  watchful  care 
of  any  oligarchy  of  propertied  men,  however  sincerely  Chris- 
tian ? 

In  some  way  and  at  some  time  the  American  people  will 
regain  and  perpetuate  the  open  market,  germane  to  their  de- 
mocracy, where  competition  is  between  man  and  man.  There 
real  prices  may  be  made,  and  kept  stable.  Then  equity  may 
prevail  and  virtue  be  supported.  Do  you  think  monopoly  can 
exalt  the  standard  of  business  morality?  Give  me  the  ethics 
of  the  open  market. 

A  decade  and  a  half  has  passed  since  this  paper  was  written.  That 
effective  competition  has  ceased  in  some  industries  is  known  to  all.  Many 
think  it  can  never  be  restored.  Suggestions  toward  government  price- 
making  abound.  Still  I  am  not  disposed  to  retract  or  materially  to 
modify  any  of  the  foregoing  statements.  Governments  can  not  make 
prices  in  any  proper  sense  of  the  word.  They  can  establish  rates  and 
stipends,  but  not  prices  or  wages.  Every  proposition  that  I  have  heard 
of  for  government  intervention  looks  to  the  fixing  of  rates  according  to 
value  of  services  or  cost  of  production.  What  determines  value  of  services 
and  cost  of  production?  Is  it  any  decree  or  fiat?  A  revelation  from 
heaven  might  possibly  do  it.  The  only  earthly  way  to  ascertain  values 
is  in  the  open  market.  Let  government  assure  us  liberty  and  justice  in 
the  market  and  prices  will  make  themselves.  That  government  may 
determine  rates  for  public  service  corporations  enjoying  public  franchises, 
and  for  monopolizing  industrial  concerns,  whether  individual  or  corporate, 
on  the  basis  of  cost  as  ascertained  in  the  open  market,  is  a  feasible  and 
reasonable  proposition. 


NOTES 

Blackstone,  Commentaries     1 :49. 
2  Plato  .Republic     3:117.     Jo  wett  translation. 

Works     3:51.     Jowett  translation. 

»  Wealth  of  Nations     bk.  1.  ch.  3;  bk.  3,  ch.  1. 

*  Publications  of  the  American  Economic  Association     3:422. 
The  whole  essay  is  commended  to  the  reader. 

6  Herodotus     1:153;  2:167.     Rawlinson  ed. 
8  Thucy(^des  I     bk.  1,  ch.  5.     Jowett  ed. 
^  Aristotle,  Politics     1:19.     Jowett  ed. 
8  Cicero,  De  Officiis. 

*  Hosea     12:7. 
i°  Amos     8:5,6. 

"  II  Principe     ch.  18. 

^^  J.  K.  Seeley,  Short  History  of  Napoleon  the  First     p.  25i  el  seq.     Boston.      1901. 

"  H.  Spencer,  Essays,  Scientific,  etc.     3:113. 

i»  Cicero,  De  Officiis     bk.  3,  ch.  12. 

'*  Statement  of  Representative  Stanley  before  House  Committee  on  Rules,  April  9, 
1911     p.  8. 

"  Kent,  Commentaries     2:494.     12th  ed. 

1'  General  Statutes  of  Minnesota,  1913     sees.  8674-76. 

'8  Writings  of  Albert  Gallatin     1:72.     Philadelphia.      1879. 

"  Attributed  by  newspapers  to  the  president  of  the  Reading  Railroad  system.  Not 
denied  so  far  as  known. 


TRUSTS 


< 


TRUSTS 

This  paper  was  first  read  before  the  Minneapolis  Board  of  Trade 
in  the  winter  of  1900. 

It  is  the  modem  fashion  to  study  institutions  genetically  in 
order  to  ascertain  their  nature  by  learning  how  they  came  to  be, 
and  to  be  what  they  are.  The  trust  is  a  recent  efflorescence 
from  seeds  sown,  some  say  by  the  enemy,  in  a  soil  which  had 
been  long  fitting  to  receive  them.  The  preparation  of  that  soil 
began  with  the  application  of  steam  to  manufacture  not  long 
before  the  close  of  the  eighteenth  century.  In  the  first  third 
of  the  nineteenth  century,  machine  production  and  the  factory 
systeni  had  broken  in  upon,  and  extensively  ousted,  the  domes- 
tic and  little  shop  industries  which  had  been  practised  through 
immemorial  ages.  But  the  factories  of  that  time  were  small 
and  local  because  their  markets  were  local.  Large  production 
came  in  with  the  railroad,  itself  a  conspicuous  illustration  of 
that  principle.  The  railroad  extended  the  market  from  county 
to  county,  and  state  to  state,  to  embrace  at  length  the  whole 
country,  and  at  length  to  pass  its  frontiers.  To-day  our  great 
productive  establishments  demand  nothing  less  extensive  than 
the  market  of  the  world,  and  boldly  claim  an  international  right 
of  access  thereto.  But  the  railroad  was  not  the  sole  cause  and 
condition  of  the  evolution  of  large  production.  That  evolution 
was  the  result  of  a  complex  of  cooperating  causes,  from  which 
such  elements  as  the  following  may  be  selected  for  enumeration, 
but  not  for  elaborate  consideration  in  this  paper. 

1.  Great  and  increasing  wealth,  the  product  of  intelligent 
industry  applied  to  virgin  soil,  and  deposits  practically  im- 
limited;  free  land  to  any,  and  all,  who  would  even  promise  to 
settle  and  cultivate. 

2.  The  capitalizing  of  constantly  increasing  increments  of 
this  wealth  and  the  development  of  banking  institutions  to  col- 
lect the  small  rills  of  personal  savings  and  turn  them  into  the 
great  channels  of  production. 

3.  The  development  among  the  people  generally,  of  the  in- 
vesting habit,  and  the  gradual  extension  of  production  in  ex- 
pectation of  demand,  at  length  making  all  large  production 
necessarily  speculative. 


32  WILLIAM  WATTS  FOLWELL 

4.  The  expanding  enterprise  and  ability  of  men  desirous  to 
wield  the  power  of  great  wealth  and  to  obtain  the  social  consider- 
ation attaching  to  great  establishments. 

5.  The  perfection  of  the  art  of  organizing  men  and  matter, 
which  reached  its  culmination  in  the  last  years  of  the  slave- 
holder's rebellion,  or  not  much  later. 

6.  The  enactment  in  many  states,  beginning  about  1850,  of 
general  corporation  laws,  making  it  easy  for  a  few  enterprising 
men  to  obtain  the  use  of  other  people's  money  through  exag- 
gerated, though  not  necessarily  untruthful,  suggestions  of  large 
dividends,  and  also  making  it  easy  to  elude  that  responsibility 
which  private  persons  have  to  bear. 

7.  Steam  transportation  and  electric  communication  opening 
remote  sources  of  material  and  distant  markets  for  products. 

8.  The  ''protective  tariff  system"  expressly  planned  and 
operated  to  nourish  nascent  industries. 

9.  Remarkable  developments  in  applied  science,  especially 
in  chemistry  and  mechanical  physics,  giving  rise  to  numerous 
inventions  and  discoveries  available  for,  and  specially  advan- 
tageous to,  large  operations. 

The  foregoing  are  outside  causes.  There  were  also  inside 
considerations  which  made  large  production  profitable  and 
swelled  its  development. 

10.  Before  all  else,  the  harnessing  of  the  forces  of  nature,  by 
means  of  water  and  steam,  and  other  motors,  and  the  utiliza- 
tion of  this  power  by  means  of  machines,  reaching  its  highest 
form  in  the  special  machine  and  systems  of  interchangeable 
mechanism. 

11.  The  division  of  labor,  assigning  functions  according  to 
strength,  skill,  and  discretion,  ever  increasing  in  importance 
with  the  multiplication  of  machines. 

12.  The  utilization  of  by-products,  as  in  the  case  of  petro- 
leum refining  where  three  hundred  by-products  are  said  to  be 
successively  eliminated. 

13.  Location  of  establishments  with  reference  to  power,  labor 
supply,  raw  material,  marketing,  and  monetary  facilities. 

14.  The  credit  system  of  doing  business,  giving  obvious  advan- 
tages for  the  purchase  of  material  in  quantity,  for  the  mainte- 
nance of  long  and  costly  productive  processes,  and  for  carrying 
the  product  until  the  time  is  ripe  for  sale. 


ECONOMIC  ADDRESSES  33 

15.  The  evolution  of  banking  through  many  costly  experi- 
ments, into  an  effective,  though  still  imperfect  system,  for  the 
custody,  and  transmission  of  moneys,  the  discount  of  commer- 
cial paper,  and  the  financing  of  large  operations,  public  and 
private. 

The  close  of  the  forty  years  period,  ending  with  the  panic 
year  1873,  saw  large  production  everywhere  intrenched  and 
triumphant.  The  little  shop,  store,  and  factory  had  disappeared. 
The  roadside  artisan  had  been  transformed  into  the  operative, 
or  had  degenerated  into  the  cobbler,  the  tinker,  or  the  busheler. 
The  economy  of  large  production  had  been  completely  demon- 
strated, and  was  universally  understood  and  acknowledged. 
No  new  institution  nor  organism  was  needed  to  further  incul- 
cate or  illustrate  this  economy. 

The  cataclysm  of  1873  awoke  the  country  to  a  new  fact, 
that  large  production  had  been  overdone,  that  the  productive 
power  of  our  motors  and  machines,  engineered  by  men  who 
vainly  trusted  that  the  consumer  could  never  fail,  had  been 
turning  out  more  goods  of  many  kinds  than  the  people  would 
pay  for  and  consum.e.  In  the  twenty  years  1850-1870,  the  num- 
bers of  manufacturing  establishments  and  of  hands  employed 
a  little  more  than  doubled,  the  capital  and  product  quadrupled; 
census^  in  round  figures  shows; 

1850  1870 

Number  of  establishments 122,000  252,000 

Employees 945,000  2,000,000 

Capital 527,000,000  2,000,000,000 

Product 1,000,000,000  4,000,000,000 

The  point  to  be  emphasized  here  is  that  this  vast  and  por- 
tentous development  of  large  production,  accompanied  by  in- 
finitesimal division  of  labor  and  processes,  the  multiplication  of 
special  machines  and  interchangeable  mechanism,  and  the  utili- 
zation of  by-products,  had  taken  place  before  the  invention  of 
the  trust.  This  being  so,  it  is  not  open  to  apologists  to  insist 
that  the  trust  is  simply  an  extention  of  a  necessary  and  inevit- 
able economic  evolution,  whose  progress  can  no  more  be  stayed 
than  that  of  the  hurricane  or  tidal  wave.  So  far  as  production 
is  concerned,  the  trust  has  introduced  no  new  principle,  no  new 
meliorations.  The  trust  is  not  then  an  evolution,  but  a  revolu- 
tionary institution,  in  the  field  of  exchange. 


34  WILLIAM  WATTS  FOLWELL 

Let  us  trace  its  growth  out  of  the  soil  prepared  for  it, 
starting  from  the  convenient  epoch  of  1873.  Too  much  labor 
and  capital  in  machine  production,  cut-throat  competition,  and 
rate-cutting  had  brought  about  a  state  of  things  which  was  in- 
tolerable. Laissez-faire  had  gone  to  seed.  The  first  experiment 
toward  relief  was  cooperative.     Three  stages  are  distinguishable. 

1.  Mere  occasional  conferences  of  operators  in  some  line  of 
business  frequently  accompanied  by  festivity.  Notes  were  com- 
pared, suggestions  interchanged,  and  a  general  understanding 
come  to. 

2.  Stated  and  periodical  meetings  of  operators,  resulting  in 
rate  sheets,  fee  bills,  price  lists,  and  other  devices  for  main- 
taining common  prices. 

3.  Compactly  organized  federations,  undertaking  to  give  re- 
lief from  the  effects  of  competition,  by  (a)  dividing  the  business 
or  (b)  dividing  territory,  or  (c)  dividing  receipts  according  to 
agreed  pAjportions.  These  associations  soon  came  to  be  called 
"pools"  and  frequently  attempted  to  reward  the  faithful  of  their 
members  by  premiums,  and  to  visit  the  delinquent  with  penal- 
ties. There  was,  however,  no  actual  sanction  to  the  pool,  and 
human  virtue  gave  way  when  business  could  be  attracted  by 
cutting  a  rate  or  price.  When  at  length  the  judiciary  declared 
pooling  to  be  "in  restraint  of  trade"  and  therefore  "illegal" 
there  were  few  to  mourn  at  the  funeral. 

We  are  now  about  the  end  of  the  70's.  The  old  evils 
persist :  excessive  competition,  unstable  prices,  men  utterly  worn 
out  with  the  fight  in  the  industrial  arena.  The  second  experi- 
ment begins  on  a  principle  new  to  the  generation,  but  not  to 
history.  There  were  times  in  the  course  of  the  feudal  system, 
when  many  small  proprietors  were  unable  to  protect  their  homes, 
their  fields,  and  their  retainers  against  raids  and  forays  of  so- 
called  robber-barons.  In  such  times  some  powerfvd  noble  would 
come  forward,  and  say  to  his  weaker  brothers,  "Swear  fealty  to 
me,  give  over  your  lands,  array  yourselves  under  my  banner,  and 
I  will  be  your  protector."  Then  arose  that  custom  known  as 
"commendation"  under  which  independence  was  sacrificed  to 
security.  The  original  trust  seems  to  me  closely  analogous  to 
"commendation."  I  think  it  safe  to  declare  that  in  every  case 
there  was  a  "promoter"  sharp,  enterprising,  not  over  scrupulous, 
the  counterpart  of  the  great  land  protector  under  early  feudal- 


ECONOMIC  ADDRESSES  35 

ism.  Individual  operators  were  just  as  keen  to  put  themselves 
under  his  leadership,  as  was  he  for  the  glory  and  profit  of  a  grand 
enterprise.  Storm-tossed  on  the  sea  of  competition,  they  longed 
for  a  quiet  haven  wherein  to  rest.  The  trust  proper  was  thus 
bom.  Its  essence,  a  small  body  of  men  (called  trustees)  domi- 
nated by  a  promoter,  to  whom  individual  proprietors  assigned 
their  plants,  and  stockholders  their  shares,  receiving  in  exchange, 
so-called  trust-certificates.  A  large  majority  of  existing  estab- 
lishments, sometimes  rising  to  eighty  per  cent,  were  taken  into 
the  fold,  and  the  remainder,  the  less  vigorous,  were  left  to  a 
fate  easy  to  foresee,  and  which  they  soon  met.  These  trustees 
managed  the  whole  industry  as  if  they  were  proprietors  although 
they  had  not  a  shadow  of  legal  title  to  the  properties;  they 
regulated  output,  assigned  territory,  and  fixed  prices,  and  held 
them  fixed  by  factors'  agreements.  They  closed  many  establish- 
ments embraced  in  the  scheme;  the  sugar  trust  needed  but  one 
fourth  of  the  existing  plants  to  supply  the  whole  United  States 
with  refined  sugar,  the  whiskey  trust  shut  up  sixty-eight  out  of 
eighty  distilleries.  Here  this  remark,  however,  is  in  point,  that 
had  no  trust  been  formed,  many  of  these  concerns  would  have 
succumbed  in  the  competitive  struggle. 

The  trust  was  immediately,  silently,  and  remorselessly  effec- 
tive. Production  in  many  great  lines  was  reduced  to  accord 
with  demand,  and  prices  were  held  up  to  a  level  on  which  very 
satisfactory  dividends  could  be  distributed.  Extortion  was  not 
necessary,  and  trust  managers  did  not  commonly  resort  to  it. 
Nevertheless  the  trust  was  obnoxious.  The  small  operators 
who  had  been  "frozen  out"  raised  a  storm  of  denunciation. 
Clamor  that  ad  caelum  and  the  sympathy  of  the  people  responded 
to  their  appeals.  Monopolies  are  always  odious,  and  these  trust 
monopolies,  because  secret  and  irresponsible,  were  especially  so. 
It  was  rare  that  a  public  man  wished,  or  dared,  to  stand  up  in 
defence  of  a  trust.  Attorneys-general  in  many  states  found 
plenty  of  common  law  precedents  for  attacking  them,  and  legis- 
latures multiplied  statutes.  About  the  beginning  of  the  90's 
the  courts  became  persuaded  that  trusts  were  illegal,  and  a  few 
such  decisions  as  those  in  The  Chicago  Gas  Trust  Case,^  New 
York  V.  North  River  Sugar  Refining  Co.,'  and  Ohio  v.  Standard 
Oil  Co.'*  brought  trust  managers  generally  to  the  same  opinion. 
Trusts  in  their  original  and  proper  form  disappeared  like  the 


36  WILLIAM  WATTS  FOLWELL 

morning  dew,  only  to  reappear  in  the  new  form  of  giant  corpo- 
rations. Because  the  change  was  not  known,  nor  understood 
by  many,  nor  because  the  same  concerns  under  the  same 
direction,  and  with  the  same  agents  and  apparatus,  seemed  to 
be  going  on,  the  old  name  of  "trust"  was  held  on  to,  and 
still  persists  in  our  discussions.  Von  Halle  observes  that  in 
some  instances,  individuals  owning  trust  certificates  were 
hardly  aware  of  the  change  of  organization,  and  much  less 
did  they  understand  the  natvire  of  the  change.  Giant  corpo- 
rations have  replaced  the  illegal  and  obnoxious  "trust,"  but 
the  people,  perhaps  unjustly,  delight  to  refer  to  them  by 
the  old  and  obvious  name.  There  are  many  variants  in 
the  organization  of  these  corporations,  but  one  feature  is 
never  lacking,  that  a  small  clique  controls  the  central  body, 
and  through  it  all  its  satellites.  Where  newly-formed,  and  not 
merely  reorganized  trusts,  they  pursue  the  same  policy  of  taking 
in  a  large  majority  of  previously  independent  concerns  and  leav- 
ing the  Remainder  to  their  fate.  The  result  is  practical  monop- 
olization of  the  particular  industry.  As  if  to  render  such  or- 
ganization and  policy  easy,  certain  states  have  enacted  general 
corporation  laws  of  extraordinary  liberality.  New  Jersey  took 
the  lead  in  generous  hospitality.  Her  laws  require  but  one 
resident  director ;  place  no  limits  on  capitalization ;  exempt  stock- 
holders from  liability  for  corporate  debts;  authorize  stock  issues 
on  the  basis  of  property  and  rights  of  action ;  confer  such  latitude 
of  powers  that  ultra  vires  may  be  impossible;  call  for  no  publica- 
tion of  reports,  and  impose  the  lowest  taxes  (charter  one  fiftieth 
of  one  per  cent  of  capital,  annual  tax  one  tenth  of  one  per  cent 
of  capital)."  The  state  of  Delaware  has  very  lately  modified 
her  corporation  laws,  to  make  them  even  more  liberal  than 
those  of  New  Jersey.  A  company  organized  to  promote  and 
assist  incorporations  in  Delaware,  allege  the  following  advan- 
tages of  that  state  over  those  offered  by  New  Jersey: 

1 .  Original  fee  twenty-five  per  cent  less  than  in  New  Jersey. 

2.  Annual  tax  only  half  of  that  of  New  Jersey. 

3.  Meetings  of  stockholders  and  directors  may  be  held  any- 
where.    (New  Jersey  stockholders  must  meet  in  New  Jersey.) 

4.  Stock  and  transfer  book  may  be  kept  anywhere. 

5.  Difficult  for  intermeddlers  to  examine  books. 

6.  Liability  of  stockholder  absolutely  limited. 


ECONOMIC  ADDRESSES  37 

7.  Stock  may  be  issued  for  services  as  well  as  property. 

8.  Certain  classes  of  corporation  specially  favored,  railroad, 
telegraph,  steam,  heat,  power,  etc. 

9.  Annual  report  need  not  reveal  secrets  of  corporation. 

10.  No  record  of  amount  of  stock  held  by  any  incorporator.^ 
Under  the  comity  between  states,  guaranteed  by  the  National 
Constitution,  corporations  legally  incorporated  in  any  state  may 
pursue  their  lawful  business  anywhere.  It  is  not,  therefore, 
strange  that  New  Jersey,  in  particular,  has  become  the  home  of 
corporations,  piratical  and  other. 

It  is  reported  that  some  fifteen  thousand  combinations  with 
an  aggregate  capitalization  of  eight  billion  dollars  have  been 
organized  under  her  laws.  Of  this  number  one  hundred  twenty 
four,  all  having  the  character  of  trusts,  with  a  capitalization  of 
three  billion  dollars  were  incorporated  in  the  fiscal  year  which 
ended  September  28,  1899.  At  least  two  hundred  New  Jersey 
corporations  with  a  capital  of  five  billion  dollars  have  the  char- 
acter of  trusts.  It  is  under  the  liberal  provisions  of  New  Jersey 
corporation  law,  that  the  Northern  Securities  Company  has  been 
recently  formed  for  the  express  purpose  of  taking  over  the  own- 
ership and  control  of  the  Northern  Pacific,  the  Great  Northern, 
and  the  Burlington  systems.  There  is  no  better  illustration  of 
what  is  called  in  this  paper,  a  trust-corporation.  Its  legality 
has  been  attacked  by  the  attorneys-general  of  Minnesota,  and  of 
the  United  States.  Minnesota's  complaint  is,  that  the  "merger" 
is  violative  of  the  statute  forbidding  the  purchase  of  parallel 
railway  lines  within  her  territory.  The  complaint  of  the 
United  States  is,  that  the  consolidation  is  a  violation  of  the  so- 
called  Sherman  Anti-Trust  Law.  It  would  be  a  reckless  thing 
to  guess  at  the  outcome  of  the  litigation,  which  will  be  looked 
for  with  greater  interest  than  any  since  the  Dred  Scott  case. 
Should  the  Northern  Securities  Company  be  forced  to  dissolve, 
the  properties  of  the  three  systems  will  still  be  in  the  control  of 
the  persons  who  are  now  its  stockholders. 

On  March  14,  1904,  the  Supreme  Court  of  the  United  States  by  a 
vote  of  five  judges  to  four  affirmed  the  decree  of  the  Circuit  Court  dis- 
solving the  Northern  Securities  Company  and  on  the  ground  of  its 
disobedience  to  the  Sherman  Anti-Trust  Act  of  July  2,  1890.  If  that 
organization  did  not  in  terms  declare  its  intention  to  abolish  competi- 
tion its  New  Jersey  charter  was  drawn  in  a  way  to  grant  opportunity 


38  WILLIAM  WATTS  FOLWELL 

and  power  to  do  so,  and  the  court  presumed  that  under  existing  circum- 
stances advantage  would  be  taken  of  the  opportunity.  "The  combina- 
tion is,"  said  the  court,  "within  the  meaning  of  the  act,  a  trust. "^ 

The  action  of  the  United  States  Government  in  1918  asking  for 
"continuances"  in  the  cases  of  the  United  States  Steel  Corporation  and 
some  others  is  a  most  notable  emergence  and  leaves  the  citizen  at  a  loss 
what  to  expect. 

Having  thus  ascertained  the  genesis  of  the  trust,  and  de- 
scribed its  successive  phases  of  evolution,  we  are  ready  for  an 
inquiry  into  its  nature.  A  clear  understanding  of  the  character 
of  trust  corporations  is  absolutely  necessary  in  this  discussion. 
It  is  glibly  remarked  by  their  members  and  friends,  that,  as 
already  stated,  the  trust  is  simply  a  new  advance  along  a  line  of 
economic  progress,  as  steady,  and  certain  as  the  stars  in  their 
courses;  that  it  is 'the  outcome  of  the  operation  of  certain  "laws 
of  trade"  whose  wheels  will  grind  to  powder  all  men  and  institu- 
tions, which  do  not  promptly  get  out  of  the  way.  Not  to  engage 
in  any  strife  about  words,  it  may  be  conceded  that  the  trust- 
corporation  is  the  outcome  of  an  evolution;  still  it  must  be  con- 
tended that  its  development  is  not  in  the  extension  of  the  line 
along  which  large  production  took  place.  Cheap  production  by 
means  of  motors  and  machines,  science,  assorted  labor,  and 
expert  management  had,  as  we  have  argued,  culminated  before 
the  trust  was  born.  The  trust  had  its  origin,  and  its  develop- 
ment has  been,  in  the  field  of  distribution.  The  market,  not 
the  shop,  has  been  its  sphere  of  action.  The  trust  is  an  eco- 
nomic institution  sure  enough.  Its  great  end  and  aim  is  gain  for 
the  proprietors,  and  what  is  more,  sure  gain;  a  profit  "incor- 
ruptible, undefiled,  and  that  fadeth  not  away." 

To  ensure  this  profit,  two  means  are  employed;  the  first, 
monopolization,  practical  monopolization  of  the  whole  plant, 
and  apparatus  of  an  industry,  of  the  regulated  product,  and 
the  agencies  of  distribution;  also,  in  some  cases,  of  the 
supply  of  raw  material.  Ancillary  to  this  is  the  destruction  of 
all  competition  in  the  purchase  of  material,  the  employment  of 
labor,  and  the  sale  of  product.  With  such  a  dam  across  the 
stream  of  an  industry,  it  is  easy  to  maintain  a  level  of  prices, 
as  sure  as  anything  in  this  world  can  be,  to  show  a  balance  on 
the  right  side  of  the  ledger,  and  take  physical  shape,  in  private 
cars,  and  villas,  and  yachts,  and  I  must  add,  in  magnificent 
endowments   of  hospitals,  museums,  libraries,  and  universities. 


ECONOMIC  ADDRESSES  39 

So  far  as  its  line  of  things  is  concerned  the  trust  abolishes  the 
market. 

The  second  means  of  gain  is  speculation.  In  some  instances 
this  may  not  have  been  a  part  of  the  original  scheme;  but  the 
present  almost  universal  issue  and  sale  of  common  stock,  by 
trust  corporations,  make  it  safe  to  assert  that  speculative  oper- 
ations are  expected,  and  certainly  they  are  going  on  as  any 
daily  newspaper  will  show.  The  trust  corporation  is  organized 
and  operated  to  exploit  the  produce  of  industry  rather  than  to 
develop  new  facilities  of  production. 

There  remains  the  question,  what,  if  anything,  is  to  be  done 
with  this  institution  still  so  youthful,  but  so  gigantic  and  tre- 
mendous? With  some,  the  answer  is  ready.  Trusts  are  mo- 
nopolies, down,  down  with  them  on  the  spot.  They  quote  Malus 
usus  abolendus  est.  A  long  continued  series  of  outrages  per- 
sisted in  by  the  trusts  might  so  incense  and  arouse  the  people, 
as  to  result  in  constitutional  legislation  for  their  utter  destruc- 
tion. This  will  not  happen.  The  managers  of  trusts,  being 
children  of  the  world,  are  wise  in  their  generation.  Assured 
in  their  expectations  of  unfailing  profit,  they  are  the  less  desirous 
of  excessive  returns.  Extortion  does  not  in  the  long  run,  pay. 
They  know  their  own  interests  too  well  to  invite  destruction, 
and  it  may  be  admitted  that  the  sudden  annihilation  of  trust- 
corporations  might  bring  public  and  private  damage  far  more 
mischievous  than  all  the  injury  they  have  thus  far  actually 
wrought.  Corporations  in  some  form  are  absolutely  necessary 
to  existing  civilization.  Capital  must  be  aggregated,  under  ex- 
pert management,  possessing  what  Blackstone  calls  a  "kind  of 
legal  immortality."^  There  is  danger  that  attempts  at  up- 
rooting of  the  trust  corporation  may  undermine  the  fabrics  of 
corporations  which  do  not  monopolize,  and  whose  agency  is 
indispensable  to  society.  The  problem  of  the  day  is  then,  not 
how  to  annihilate,  but  how  to  restrict  and  control  the  trust- 
corporation.  And  the  solution  of  this  problem  is  not  to  be 
facilitated  by  wild  declamation,  nor  any  amount  of  newspaper 
reviling.  The  limits  of  the  occasion  do  not  permit  a  serious 
attack  upon  the  problem  of  regulating  trust-corporations.  I 
will  only  ask  leave  to  summarize  what  has  been  presented,  and 
to  add  some  suggestions  excluded  from  the  discussion  thus  far, 
for  the  sake  of  clearness. 


40  WILLIAM   WATTS  FOLWELL 

1.  The  trust  did  not  give  rise  to  large  production,  and  its 
accompanying  economics,  but  succeeded  to  that  regime. 

2.  The  prime  object  of  the  trust  is  to  monopolize,  which 
implies  the  exclusion  of  competition,  the  obliteration  of  the 
market,  and  the  closing  of  the  doors  of  opportunity  to  capital 
and  labor,  which,  were  the  field  free,  would  offer  their  services 
to  the  public. 

3.  The  secondary  object  is  exploitation,  i.e.,  greedy  specula- 
tion. The  spectdative  characteristic  means,  that  by  over-capi- 
talization and  waiting,  the  promoters  intend  to  take  possession 
of  any  unearned  increment  of  value  which  may  accrue  from 
monopoly,  and  demand  from  the  public  continuing  dividends 
thereon. 

4.  The  temptations  to  which  institutions  thus  constituted 
are  exposed  are: 

a.  To  impoverish  material  men,   or    to   squeeze  them  out 

ojmpletely,  and  seize  and  engross  the  original  deposits 

b.  To  depress  wages 

c.  Reduce  quality  of  goods  or  services 

d.  To  restrict  output 

e.  To  extort  excessive  prices 

f.  To  subordinate  service  to  exploitation,  and  regulate  the 
volume  of  production  so  as  to  "bull"  or  "bear"  the  stock 
market 

g.  To  use  wealth,  influence,  and  talent  to  corrupt  legislators, 
judges,  commissioners,  and  taxing  authorities. 

The  last  item  may  be  dismissed  with  the  remark  that  it 
affects  individuals,  partnerships,  and  associations  of  many  sorts. 
Trust  managers  have  no  monopoly  in  the  lobby.  They  may  have 
exceptional  influence,  however.  Here  come  certain  admirable 
persons,  comfortable  bodies,  who  do  not  feel  responsible  for  the 
universe,  with  the  assuring  suggestion  that  there  is  no  need  of 
alarm,  neither  of  any  political  gymnastics.  "If,"  they  say, 
"the  trust  proprietors  are  riding  too  high,  the  laws  of  trade 
will  presently  bring  them  low.  They  know  their  own  interests 
far  too  well,  to  undertake  to  fleece,  or  to  deceive,  the  public. 
They  will  never  dare  to  refuse  the  demands  of  organized  labor. 
Their  interests  run  with  those  of  the  public."  There  is  force  in 
these  suggestions.  To  hold  their  monopoly  intact,  trust  cor- 
porations will,  for  a  time  at  least,   forego   excessive  and  open 


ECONOMIC  ADDRESSES  41 

extortion,  and  exert  themselves  to  render  good  service  and  sell 
honest  goods,  so  far  as  they  are  directed  by  wise  and  honest  men. 
There  are  some  who  hold  to  the  conviction  that  a  trust  can 
never  so  stifle  and  suppress  competition  as  to  maintain  air-tight 
and  continuing  monopolies.  This  is  the  view  of  Professor  John 
Bates  Clark,  known  to  many  here  as  standing  in  the  fore-front 
of  American  economists.  "Potential  competition,"  said  Professor 
Clark,  at  the  late  Chicago  conference,  "potential  competition 
will  clip  the  wings  of  any  trust  which  soars  too  high."^  For 
myself,  I  can  not  take  this  serene  and  comfortable  view,  however 
devoutly  I  could  hope  it  might  prove  to  be  the  true  one.  To 
have  our  great  industries  carried  on  by  benevolent  fraternities, 
desiring  only  moderate  recompense  for  the  best  service,  living 
the  austere  lives  of  anchorites,  and  devoting  their  surplus 
income  to  art,  education,  charity,  and  religion,  is  an  ideal  not 
to  be  approximated  in  our  day.  The  trust-corporations  are 
engineered  by  men  of  like  passions  with  ourselves,  eager  for 
the  power  and  consideration  which  flow  from  great  wealth. 
They  are  under  the  stress  of  great  temptations,  and  feel  them- 
selves justified  by  the  ancient  and  economic  creed  of  "the  devil 
take  the  hindmost."  They  need  the  moderating  hand  and 
voice  of  the  law  to  keep  them  in  the  paths  of  virtue.  The 
state  must  control  the  trusts  or  the  trusts  will  dominate  the 
state.  The  state  will  control  them.  There  is  plenty  of  good 
doctrine  and  principle  to  justify  her  interference.  It  is  ancient 
and  elementary  in  law,  that  corporations  are  created  by  law 
"when  it  is  for  the  public  advantage."  The  common  law,  for 
ages,  has  abhorred  monopolies.  Equally  venerable  is  the  doc- 
trine that  whenever  property  is  affected  by  a  public  interest, 
it  ceases  to  be  sui  juris,  and  may  be  regiilated  by  law.  I  sub- 
mit that  whenever  a  trust-corporation  has  completely  monopo- 
lized an  industry,  or  the  supply  of  material,  and  the  machinery 
of  distribution,  it  may  be  considered,  and  treated,  as  having 
become,  by  its  own  act,  a  public  institution  and  agency,  in  an 
eminent  sense.  It  is  within  the  just  powers  of  government 
to  attach  any  requisite  conditions  not  only  to  the  creation 
of  corporations,  but  to  their  continuance.  In  spite  of  Dart- 
mouth College  decisions,  the  American  people  need  not,  and 
they  will  not,  consent  that  their  rights  may  be  indefinitely 
chartered  or  contracted  away    by    the   government   of  a  day. 


42  WILLIAM  WATTS  FOLWELL 

How  wisely  to  apply  these  principles  is  the  task  of  our  younger 
economists  and  statesmen,  less  fettered  than  those  passing  off, 
by  the  traditions  of  laissez-faire  economics.     Among  the  propo- 
sitions now  before  the  public  are  such  as  these: 
Enlarged  liability  of  stockholders 
Large  responsibility  of  directors  and  officials 
Prohibition  of  over-capitalization  and  stock-watering 
Reduction  of  tariff  when  industry  is  monopolized 
Change  in  legal  character  of  labor-contract 
Progressive  taxation  on  income  and  dividends 
Prohibition  of  buying  and  selling  their  own  stocks 
Limiting  the  magnitude  of  corporations 
Public  ownership  of  all  natiiral  monopolies,  mines,  railroads, 
gas  and  water  works,  wharves  and  docks,  etc.,  thus  obliterating 
the  corresponding  corporations 

Abolition  of  all  private  corporations 

United  States  Government  license   (with  visitation)   of  all 
corporations  for  interstate  business 

These  I  do  not  enter  upon.  The  difficulty  of  applying  such 
remedies  under  our  comity  of  state,  and  New  Jersey,  hospitality 
is  apparent.  There  is  a  proximate  remedy,  which  I  have  com- 
mended to  my  students  for  many  years  and  now  widely  men- 
tioned, summed  up  in  the  phrase  "sunlight  of  publicity."  The 
right  of  visitation  of  corporations,  lodged  in  the  British  Crown, 
the  chancery  and  parliament,  inherited  by  the  state  in  America,'' 
though  greatly  impaired  in  our  country,  has  never  fallen  into 
complete  neglect.  In  our  own  state,  inquiry  into  the  affairs  of 
corporations,  may  be  made  by  the  legislature,  the  governor,  the 
attorney-general,  the  public  examiner,  the  superintendent  of 
schools,  the  insurance  commissioner,  and  perhaps  other  officials. 
This  immemorial  right  of  visitation  might  well  be  reinvigorated, 
and  applied  to  monopolizing  corporations,  and  with  even  greater 
propriety,  to  such  as  enjoy  any  public  franchise.  The  affairs  of 
such  institutions  are  public  affairs,  and  the  public  is  entitled  to 
complete  knowledge  of  them.  This  principle  is  operated  with 
vigor  in  the  supervision  of  national  banks  by  the  Treasury,  and 
the  inspection  of  otir  state  banks  of  Minnesota  by  the  public 
examiner.^"  Such  inspection  would  greatly  brace  up  the  virtue 
of  directors  and  officials,  and  would  quiet  many  injurious  sus- 
picions, harbored  in  the  minds  of  people. 


ECONOMIC  ADDRESSES  43 

But  this  knowledge  of  the  doings  and  dealings  of  corpora- 
tions is  not  enough.  If  the  monopolizing  corporations  render 
a  service  to  the  public  in  maintaining  stable  prices,  and  for 
this  they  are  much  commended,  it  is  because  of  the  knowledge 
which  their  managers  have,  or  may  have,  of  the  state  of  their 
trade.  Through  their  experts  they  know  the  cost  of  material, 
the  cost  of  production,  the  cost  of  selling,  and  the  probable 
demand  for  their  goods.  As  long  as  they  have  such  knowledge, 
and  the  public  have  it  not,  the  corporations  will  be  likely  to 
exploit  the  public.  From  time  immemorial,  all  trades  have 
been  each  an  art  and  mystery,  concealed  as  much  as  possible 
from  the  world  of  consumers.  To  keep  sacredly  the  secrets  of 
the  craft  was  part  of  the  education  and  duty  of  the  craftsman 
and  merchant;  and  this  tradition  has  been  perpetuated,  with 
the  result  that  in  fixing  prices,  the  cost  of  production  and 
distribution  is  subordinated  and,  as  much  as  possible,  kept  out 
of  sight.  Prices,  therefore,  are  fixed  on  the  principle  of  what 
the  traffic  will  bear  in  competition  with  dealers.  In  our 
ignorance  of  true  costs,  the  trust,  which  can  suppress  compe- 
tition, has  the  public  by  the  throat.  In  the  public  economy  of 
the  future,  the  gathering  and  dissemination  of  economic  facts 
and  knowledge  will  be  the  prime  function  of  government. 
The  department  of  statistics  at  state  and  national  capitals  will 
overshadow  every  other,  and  the  knowledge  of  products,  their 
costs  and  uses  ought  to  be  so  general  that  no  dealer  can  deceive, 
and  no  clique  can  rig  the  market. ^^  In  regard  to  a  few  great 
staple  products,  the  public  may  already  know  in  a  general  way, 
the  ordinary  supply  and  demand,  the  cost  of  production,  and 
other  facts  affecting  price.  As  our  state  and  national  statistical 
bureaus  are  extended  and  perfected,  such  knowledge  will  be- 
come more  exact,  and  will  be  extended  to  embrace  other  prod- 
ucts, until  finally  the  whole  market  may  be  an  open  book  to 
all  men  who  have  eyes  to  see  with.  The  time  should  soon  come 
when  no  clique  of  speculators  can  possibly  be  better  informed 
as  to  the  state  and  prospects  of  the  market  than  the  people  at 
large,  through  their  public  statistical  agencies.  The  people 
perish  for  lack  of  knowledge.  Some  day  wc  shall  be  using  our 
higher  schools  to  diffuse  economic  knowledge.  In  place  of  the 
ablative  absolute  and  Sturm's  theorem,  of  the  lists  of  French 
kings,  and  Mariotte's  law,  our  children's  children  will  be  taught 


44  WILLIAM  WATTS  FOLWELL 

the  nature  and  properties  of  cereals,  coal,  ores  and  metals,  tex- 
tile plants,  tea,  coffee,  fruits,  spices,  and  the  things  made  from 
them,  where  all  these  come  from,  how  they  are  produced,  and  how 
they  are  interchanged  between  continents,  states,  and  communi- 
ties. When  the  public  come  to  be  fully  informed  they  will  be 
likely  to  be  alert.  "Combines"  will  not  long  be  able  to  exploit 
the  social  industry.  The  remedy  of  President  Hadley,  the  turn- 
ing up  of  noses,  and  giving  the  cold  shoulder  to  speculators  and 
engrossers,  which  has  provoked  a  great  deal  of  mild  sarcasm, 
mostly  undeserved,  will  become  operative  and  efficient.  In  the 
face  of  intelligent,  resolute,  and  unanimous  public  denunciation, 
few  men  will  have  the  courage  or  the  willingness  to  endure  the 
odium  that  will  rest  on  those  who  would  live  and  thrive  by 
exploitation. 

It  is  now  more  than  a  quarter  of  a  century  since  the  enactment  of 
the  Sherman  Anti-Trust  Law.  While  certain  combinations,  such  as 
the  North^n  Securities  Company,  and  the  Tobacco  and  Sugar  trusts 
have  been  forced  into  dissolution  because  held  to  be  "in  restraint  of 
trade,"  the  cases  of  other  combinations  such  as  the  United  States  Steel 
Corporation,  the  International  Harvester  Company,  and  the  United 
Shoe  Machinery  Company  still  remain  pending  in  the  courts.  Within  a 
few  months  the  Government  has  asked  for  a  suspension  of  proceedings 
on  the  ground  that  should  dissolution  be  decreed  (and  this  would 
seem  to  be  taken  for  granted  by  the  Government)  the  resulting  private 
financing  might  injuriously  interfere  with  the  floatation  of  its  war  loans. 
There  have  been  from  the  beginning,  statesmen  whose  opinions  are 
entitled  to  respect,  who  believe  that  the  act  should  never  have  been 
passed.  Great  combinations,  they  hold,  are  inevitable  in  an  era  of 
large  production,  and  they  ought  to  be  regulated,  not  abolished. 
There  are  those  who  believe  that  the  act  can  never  be  fully  and  im- 
partially enforced. 


NOTES 

>U.  S.  Census  Reports,  1850  and  1870. 

Round  numbers  are  used. 
«  130  Illinois  268,  1859. 
»  121  New  York  528,  1870. 

*  490  0*10  137,  1892. 

»  For  a  partial  list  see  Von  Halle,  Trusts     p.  328.     1895. 

*  Ely,  Monopolies  and  Trusts     p.  277. 

'  193  United  Slates  197-411.     Printed  as  Senate  Document  232,    58th  Congress,  2d  session. 

*  Commentaries     bk.  1,  ch.  18. 

»J.  B.  Clark,      Modern  Distribution  Process     p.  6.      Boston.   1888. 

'•  By  sec.  3,  Laws  of  1909  the  supervision  of  State  banks  was  transferred  to  the 
superintendent  of  banks  whose  oflBce  was  then  established. 

1'  The  reader  will  perhaps  observe  that  the  author  has  again  paraded  this,  his 
favorite  hobbv. 


THE  SINGLE  TAX 


THE  SINGLE  TAX 

On  the  evening  of  January  3,  1899,  Mr.  Henry  George  spoke  in 
the  Lyceum  theatre  in  Minneapolis,  Minnesota,  to  a  large  and  interested 
audience  on  his  favorite  theme,  "The  Single  Tax."  Returning  from  the 
lecture  on  a  street  car  the  writer  was  asked  by  some  of  his  students  to 
speak  in  reply.  "Hire  a  hall,  and  I  will  try,"  was  the  response.  That 
was  done.  His  address  was  delivered  on  the  evening  of  January  31, 
1899.  On  request  of  the  Minnesota  Legislature  it  was  repeated  in  the 
hall  of  the  House  of  Representatives.  The  following  pages  contain  the 
address  substantially  as  written  out  in  intervals  of  exacting  duties.  While 
the  speaker  has  not  materially  changed  his  views,  he  would,  if  writing 
anew,  endeavor  to  improve  his  diction,  and  would  probably  suppress 
some  passages  that  border  on  levity. 

When  Mr.  Henry  George  appeared  in  this  hall  some  days 
ago,  all  present  were  instantly  charmed  with  his  personality. 
His  well-set  figure,  and  massive  head,  his  gracious  eye  and  kind- 
ly face  bespoke  him  at  once,  as  one  of  those  persons,  "who" — to 
use  a  happy  Emersonian  phrase — "who  are  to  be  considered." 
He  is  a  man  very  much  in  earnest.  He  is  full  of  that  "enthu- 
siasm of  humanity"  which  inspires  reformers.  Mr.  George  cares 
for  his  fellowmen  and  desires  with  all  his  heart  to  see  liberty 
and  comfort  everywhere  increased.  Let  us  follow  his  excellent 
example  of  going  at  once  to  the  business  in  hand. 

First :  the  question  which  meets  us  is,  do  existing  conditions 
and  circumstances  permit  the  consideration  of  the  single  tax, 
so-called,  as  a  practicable  working  scheme  in  these  United  States  ? 
Granting  for  the  moment  all  that  Mr.  George  claims  for  it  as 
an  ideal  plan  of  taxation,  can  it  be  worked,  as  men  and  things 
now  are  in  this  country  ?  To  this  question  I  answer  "No" :  for 
these  reasons:  first,  it  is  of  the  essence  of  this  scheme  of  taxa- 
tion that  it  be  single  and  exclusive.  Its  advocates  expressly, 
and  with  great  emphasis,  insist  on  the  abolition  and  abandonment 
of  all  other  taxes,  because,  adopting  Mr.  George's  phrase  "either 
stupid  or  unjust  or  both."  They  believe  and  declare  that  exist- 
ing taxes  amount  to  fines  levied  upon  labor  and  capital  and 
Mr.  George  insinuated  that  they  are  intended  so  to  operate. 

All  existing  plans  and  ways  of  collecting  revenue,  national, 
state,  and  local,  are  then  to  be  cleared  away,  before  the  single 
tax  can  go  into  effect.  Let  us  suppose  that  the  whole  ninety 
millions  of  us  should  be  converted  to  the  gospel  of  the  single 


50  WILLIAM  WATTS  FOLWELL 

tax  in  the  course  of  the  calendar  year  now  passing,  I  think  it 
ought  to  take  about  a  generation  to  make  the  change  of  systems. 
A  state  is'  a  vast  and  complicated  thing,  and  a  revenue  system 
is  a  large  element  in  a  state.  Said  Burke,  in  a  happy  but  jus- 
tifiable hyperbole,  ''The  Revenue  of  the  State  is  the  State. "^ 
By  pursuing  for  years  and  ages  a  certain  public  policy,  govern- 
ment clothes  citizens  with  rights,  claims  if  you  prefer  the  word, 
as  against  the  state.  She  invites  citizens  to  form  settlements, 
to  employ  capital  and  labor  in  certain  industries,  and  enters  in- 
to covenant  of  quiet  enjoyment. 

At  the  beginning  of  the  present  government  of  the  United  States, 
we  established  and  have  since  maintained,  a  revenue  system  expressly 
devoted  to  inducing  citizens  to  embark  in  manufactures,  and  we  have 
endowed  transportation  with  untold  millions. 

Governments  are,  therefore,  in  the  practice  of  sane  and  just 
men,  estopped  from  sudden  economic  revolutions.  Especially 
is  this  tnie  of  proposed  revolutions  of  the  land-laws  of  a  people, 
for  these'  laws  prescribe  and  predetermine  the  very  nature  of 
the  state.  Grant  to  a  legislature  the  power  to  fix  the  tenure 
and  descent  of  lands,  and  in  the  words  of  Tocqueville,  it  "may 
rest  from  its  labors.  The  machine  once  put  in  motion  will  go 
on  for  ages,  and  advance  as  if  self-guided,  toward  a  given 
point. "^  Primogeniture  will  develop  an  aristocracy,  partible 
inheritance  moves  towards  democracy.  No  nation  of  ninety 
millions  can  or  ought  to  make  a  great  and  radical  revolution 
in  its  housekeeping,  in  the  time  it  takes  the  legislative  clerks 
to  call  the  roll.  But  not  to  make  too  much  of  this  phase,  let 
it  be  granted  that  this  nation  could  skip  from  its  old  revenue 
system  to  a  new  one  as  easily  as  Harlequin  shifts  his  jackets  and 
masks;  provided  the  American  people  had  undergone  the  neces- 
sary change  of  heart,  and  had  resolved  to  leave  off  compelling 
themselves  to  pay  unjust  and  stupid  taxes  and  tariffs,  operating 
as  fines.  Let  this  be  granted,  we  meet  the  question  are  the 
American  people  likely  to  be  suddenly  and  presently  converted? 
It  is  demanded  specifically  that  the  tariff  must  go  to  make 
room  for  the  single  tax.  Do  you  think  the  protective  system 
is  about  to  fade  away  suddenly  like  the  grass  ?  Where  have  you 
been  hiding  since  the  kalends  of  November?  It  was  a  square 
issue  between  protection  and  free  trade. 


ECONOMIC  ADDRESSES  51 

The  reference  was,  of  course,  to  the  presidential  campaign  of  1898, 
in  which  Cleveland  was  defeated  by  Harrison  on  a  clean  tariff  issue. 

Every  possible  argument,  pro  and  con,  was  blazoned  from 
the  stump  and  spread  out  in  the  columns  of  the  pamphlet,  book, 
and  newspaper  press.  There  were  no  distracting  side-issues. 
The  day  of  trial  came.  Did  you  hear  it  ?  Did  you  hear  the  voice 
of  the  people  on  the  sixth  of  November? 

"It  came  as  the  winds  come  when  forests  are  rended; 
It  came  as  the  waves  come  when  navies  are  stranded," 
a  complete  triumphal  approval  and  ratification  of  the  protective 
principle  and  system.     No  matter  what  any  one's  private  opin- 
ion may  be,  every  one  will  admit  this  result  as  a  cold,  solid  fact. 

I  am  but  a  moderate  protectionist,  and  free  trade  ideals  are 
dear  to  my  heart;  what  I  fear  is  that  it  will  be  impossible  to 
obtain  in  the  present  generation  those  modifications  and  reduc- 
tions of  tariff,  which  protectionists  of  the  reasonable  sort,  de- 
mand. Abolish  protection?  Abolish  indirect  taxation  by  im- 
posts on  imported  goods  in  one  day?  It  will  take  a  Joshua 
mightier  than  the  commander  of  Israel  to  roll  back  the  wheels 
of  protection. 

To  work  the  single  tax,  the  taxes  on  franchises  of  every  sort 
and  the  license  taxes  on  liquor  selling  must  go.  Is  there  any- 
thing in  the  present  state  of  the  public  mind  on  these  subjects, 
to  indicate  an  early  abandonment  of  these  forms  of  taxation? 
The  internal  revenue  taxes  on  whiskey  and  tobacco  must  go; 
and,  because  (along  with  all  other  existing  means  of  taxation) 
they  are  "stupid  and  unjust,"  the  nation  must  be  forever  de- 
barred from  reestablishing  any  similar  internal  revenue  system, 
no  matter  what  dangers  threaten  within  or  without.  Will  the 
nation  disarm? 

The  speaker  might  have  remarked  that  under  the  single  tax  regime, 
the  nation,  the  state,  and  all  municipalities  would  be  debarred  from 
levying  taxes  for  the  restraint  of  monopolies,  the  discouragement  of 
vice  and  immorality,  the  abolition  of  impure  foods,  the  preservation  of 
game,  and  "social  purposes"  generally. 

Further,  we  have  not  merely  to  deal  with  particular  existing 
statutes  and  machinery  for  collecting  public  revenue,  but  with 
ideas,  prejudices,  and  customs  so  ancient  that  "the  memory  of 
men  runneth  not  to  the  contrary";  with  ideas  and  doctrines 
running  back  to  the  time  of  Aristotle  at  least.     There  is  an 


52  WILLIAM  WATTS  FOLWELL 

idea  that  as  all  forms  of  property  are  protected  by  the  state, 
they  may  all  be  rightly  subjected  to  taxation  if  the  public  needs 
require.  The  single  tax  men  know  but  one  kind  of  property, 
which  may  be  justly  taxed,  and  that,  they  are  proposing  to 
abolish.  There  is  the  idea  that  as  all  persons  are  under  the  pro- 
tection of  the  state,  so  all  persons  may,  if  the  public  needs  re- 
quire, be  called  upon  to  contribute  to  the  support  of  the  govern- 
ment and  its  reasonable  pvirposes.  The  single  tax  doctrine  is  not 
to  touch  persons,  as  such,  but  only  as  they  are  receivers  of  the 
public,  of  the  rents  and  profits  of  land.  Again  there  is  the  idea 
that  as  all  industries  and  employments  are  protected  by  the 
state,  the  government  may,  if  public  needs  demand,  collect  some 
fraction  of  the  returns  and  profits  of  industry  and  incomes  of 
well-paid  employees   and   professional  people. 

I  do  not  accept  either  of  these  propositions,  protection  of  property, 
or  protection  of  persons,  as  the  ultimate  ground  of  the  taxing  power. 
They  are  iipidental  considerations.  Here  I  am  only  insisting  that  the 
ideas  are  ancient,  traditional,  and  everywhere  accepted. 

There  is  no  possible  room  or  justification  for  an  excise,  in- 
heritance, or  income  tax,  under  the  single  tax  regime. 

Second;  there  is  another  idea,  which  has  played  a  great  part 
in  the  history  of  the  Anglo-Saxon  race,  embodied  in  an  epigram, 
as  familiar  to  every  English-speaking  man  as  the  immortal 
rhymes  cf  Mother  Goose  "no  taxation  without  representation." 
Now  let  this  doctrine  be  as  absurd  as  the  romance  of  Peter  Wil- 
kin, grant  that  it  was  never  anything  more  than  an  airy  and  im- 
practicable revolutionary  rallying  cry,  still  no  man  in  his  senses 
will  deny  that  "no  taxation  without  representation"  is  stamped 
across  every  page  of  his  political  history. 

Our  American  colonists  objected  to  being  taxed  by  a  foreign  legis- 
lature, in  which  they  had  no  representation.  The  cry  "no  representa- 
tion" had  no  reference  to  tax-paying  as  a  qualification  for  voting.  It  is 
a  novel  and  strained  use  of  the  phrase  by  advocates  of  suffrage  extension, 
when  they  claim  that  all  persons  owning  taxable  property  should  have  the 
right  to  vote. 

Defiance  of  this  immemorial  tradition  cost  one  of  the  Stuart 
kings  his  crown,  and  another  his  crown  and  head  to  boot.  "No 
taxation  without  representation"  was  the  cry  which  nerved  the 
hearts  and  steadied  the  aim  of  the  embattled  farmers  at  Lex- 
ington and  Concord.     It  may  have  been  a  miserable  mocking 


ECONOMIC  ADDRESSES  S3 

delusion,  but  the  same  sentiment  bore  up  the  courage  of  the 
soldiers  of  the  Revolution  from  Lexington  to  Yorktown,  and 
cemented  into  one  national  union  Roundhead  of  New  England, 
Virginian  Cavalier,  Quaker  of  Pennsylvania,  Catholic  of  Mary- 
land; English,  Dutch,  German,  Swede,  all  faiths,  all  bloods,  and 
all  interests.  In  obedience  to  sentiment  universal  at  the  time, 
the  framers  of  the  national  constitution  provided  that  "direct 
taxes  and  representation  shall  be  apportioned  according  to 
population,  and  not  according  to  property  or  values  of  any 
kind."  Taxation  and  representation,  are  in  the  national  code, 
coextensive  and  inseparable. 

The  doctrines  I  have  enumerated  are  embodied  in  every  one 
of  our  state  constitutions.  The  Minnesota  Constitution  fur- 
ther provides  that  all  taxes  shall  be  "equal"  as  nearly  as  may 
be,  and  it  will  be  sometime  before  the  people  of  this  state  shall 
be  persuaded  that  "equal"  means  laying  all  taxes  on  some  one 
class,  or  some  one  kind  of  property. 

The  new  section  to  Article  9  of  the  Minnesota  Constitution,  adopted 
November  6,  1906,  empowers  the  legislature  to  select  classes  of  "subjects" 
for  taxation,  and  requires  that  taxes  shall  be  "equal  upon  the  same  class 
of  subjects."  Up  to  this  time  no  material  changes  have  been  made  in 
the  system. 

Third;  the  single  tax  scheme,  alone  and  exclusive,  is  also 
impracticable  because  of  our  complicated  American  government. 
We  have  three  systems  of  taxation,  working  side  by  side,  and 
two  or  more  independent  agencies  of  tax  administration.  We 
have  a  national  system  of  indirect  taxation  by  means  of  imposts 
on  imported  merchandise,  and  by  internal  revenue  excises  on 
certain  selected  manufactures.  We  have  also  state  taxes,  and 
local  taxes  administered  by  mixed  agencies  of  state  and  local 
officials.  The  single  taxers  do  not  inform  us  what  agency  they 
propose  to  employ.  There  would  be  no  sense  in  using  two  or 
three  agencies  for  administering  a  single  tax  system.  Some  one 
of  these  existing  jurisdictions,  national,  state,  or  local  must  be 
made  the  primary  agent  for  obtaining  the  single  tax  revenue, 
and  be  required  to  pay  over  to  the  other  two  their  respective 
shares.  Do  you  expect  the  state  governments  will  subordinate 
themselves  to  their  creatures,  the  town  and  city  authorities,  and 
exist  by  their  sufferance?  Far  more  likely  it  is  that  the  power 
of  local  taxation  by  cities  and  towns  would  vanish  away  and  the 


54  WILLIAM  WATTS  FOLWELL 

municipalities  content  themselves  as  best  they  could  with  such 
moneys  as  the  state  legislatiu-e  should  dole  out  to  them.  Local 
government,  the  pride  of  American  and  Anglo-Saxon  free  men, 
would  of  consequence  disappear.  But  how  would  the  state 
governments  fare  when  it  came  to  the  question  whether  they  or 
the  national  government  should  be  primary  collectors  of  the 
single  tax  revenue?  Does  not  every  schoolboy  know  that  we 
changed  the  government  of  the  United  States  in  1789  from  a 
confederation  to  a  national  union,  chiefly,  almost  exclusively, 
because  the  states  would  not  collect  and  pay  over  the  "quotas'* 
imposed  by  Congress?  Schoolboys  may  not  know,  but  grown 
men  ought  to  know,  what  kind  of  tax  it  was  that  the  old  Con- 
gress of  the  Confederation  tried  in  vain  for  years  to  extort  from 
the  reluctant  states.  Some  of  us  may  have  forgotten,  so  let 
me  remind  you  that  it  was  a  single  tax  on  improved  lands  after 
an  idea  imported  from  France  along  with  other  political  bric- 
a-brac.  The  framers  of  the  constitution  of  1789  applied  them- 
selves to  make  a  national  government  which  should  not  need  the 
interposition  of  any  state,  to  raise  and  collect  its  revenue.  They 
put  into  that  document  a  power  to  raise  revenue,  absolute,  un- 
assailable, irrevocable.  And  this  power  has  been  defined  and 
supported  by  a  long  course  of  supreme  adjudication.  With  a 
standing  army,  and  a  navy  which  we  now  talk  of  making  the 
most  formidable  that  ever  ploughed  the  seas,  do  you  think  the 
national  government  will  surrender  her  unquestioned,  traditional, 
unlimited,  supreme  power  of  taxation?     It  is  absurd  to  expect  it. 

I  think  it  much  to  be  feared  that  a  people  so  martial  in  character 
as  the  Americans  would  wish  to  raise  and  maintain  a  standing  army  of 
500,000  men  and  a  navy  of  200  battleships  with  all  necessary  accompani- 
ments. As  this  volume  goes  to  press  the  United  States  Government 
with  the  full  and  hearty  approval  of  the  people  is  engaged  in  raising  an 
army  of  two  millions,  and  a  navy  of  innumerable  bottoms.  And  it  is 
predicted  by  some  persons  whose  judgment  may  prove  to  be  sound  that 
we  shall  in  the  coming  three  years  increase  the  army  to  five  millions. 
How  charming  a  contrivance  for  raising  the  billions  of  money  would  the 
single  tax  be! 

The  single  tax  scheme  if  worked  at  all,  must  be  engineered 
by  the  general  government  and  its  agents,  and  the  states  and 
all  municipalities  through  the  states  will  enjoy  only  such  rev- 
enues as  Congress  shall  see  fit  to  apportion  and  pay  over.  Under 
such  a  scheme  the  forms  of  democracy,  might,  indeed,  siu-vive. 


ECONOMIC  ADDRESSES  55 

but  the  state  and  the  government  would,  in  essence  be  imperial. 
Of  all  tyrants  the  many-headed  tyrant  is  the  one  most  to  be 
dreaded. 

For  these  reasons:  (1)  the  impossibility  of  clearing  away 
existing  taxes;  (2)  the  persistence  of  ancient  custom  and  indus- 
tries; (3)  the  peculiar  and  complicated  nature  of  our  American 
government;  for  these  reasons,  which  are  by  no  means  all,  as 
stated  and  discussed,  I  submit  the  conclusion,  that  the  single 
tax,  the  exclusive  tax  on  land  values,  has  no  claim  to  considera- 
tion as  a  practicable  working  plan,  in  this  country,  in  our  day. 

Let  us  next  examine  the  single  tax  scheme  as  a  mere  doctrine, 
as  an  ideal  thing.  It  is  a  grateful  and  indeed  not  an  unfruitful 
exercise  to  let  our  minds  play  freely  on  great  and  serious  mat- 
ters; to  let  the  imagination  soar  a  little  skyward;  nay  'tis  well 
to  dream  betimes,  of  Utopias  and  blessed  isles.  What  do  these 
dreamers  say?  First  of  all,  that  all  taxes  except  the  proposed 
single  tax  on  land  value  are,  "either  stupid  or  unjust  or  both," 
and  I  hear  no  exceptions  made  on  account  of  stress  of  war  or 
famine  or  other  calamity.  They  assume,  then,  a  state  of  con- 
tinuous and  universal  peace.  Does  the  history  of  this  nation 
or  of  any  nation  warrant  any  such  exceptions?  Must  a  nation, 
beleaguered  and  invaded,  lay  down  its  arms,  and  accept  the  terms 
of  the  foe,  at  the  point  where  the  revenue  from  single  tax,  on 
land  values  shall  have  been  exhausted?  Were  that  the  doctrine 
of  the  world,  one  single  nation,  not  so  scrupulous  about  collect- 
ing taxes  from  persons,  chattels,  incomes,  franchises,  and  so  on, 
would  soon  dictate  the  conditions  of  existence  to  all  the  rest. 
The  single  tax,  as  advocated,  endangers,  if  not  denies,  the  right 
and  power  of  nations  to  maintain  their  organized  existence. 
The  old  common  law  theory  suits  me  better,  that  a  free  and 
a  brave  people  may  "rob  the  cradle  and  the  grave"  to  recruit 
their  defensive  forces  and  throw  the  last  dollar  they  can  wring 
from  the  orphan  and  the  widow  into  the  military  chest. 

These  dreamers  assume  the  continuous  and  universal  advance- 
ment of  society;  population  always  on  the  increase  and  evenly 
so,  wealth  increasing,  intelligence  and  virtue  always  abounding 
more  and  more.  The  world  does  move,  has  moved,  but  never 
on  any  continuous  line  of  advance  by  steady  and  unbroken 
march.  The  lot  of  civilized  man  in  general  has  been  painful 
and  stormy.     The  progress  of  particular  nations  has  been  by 


56  WILLIAM  WATTS  FOLWELL 

fits  and  starts,  periods  of  depression  succeeding  as  by  a  kind 
of  rhythm,  to  epochs  of  advance.  There  have  been  times  in 
the  history  of  this  country  when  the  rental  value  of  land  would 
hardly  have  paid  the  salaries  of  the  town  clerks.  Fortunately, 
unjust  and  stupid  taxes  on  imports,  on  incomes,  and  property 
of  many  kinds  saved  us  from  political  marasmus.  The  progress 
of  wealth  and  population  is  not  uniform  in  different  parts  of  the 
country.  Population  shifts  and  industries  migrate.  Rents  go 
down  in  New  England  and  go  up  in  Dakota.  One  New  York 
county,  with  which  I  have  been  acquainted,  declined  in  popu- 
lation from  1860  to  1870  and  again  in  the  decades  1880  and  1890. 
That  county  was  on  the  whole,  probably  richer  in  the  admin- 
istration of  John  Quincy  Adams  than  it  has  been  since.  I 
should  like  to  know  if  any  provision  will  be  made  by  the  single 
taxers  to  reimburse  the  Seneca  county  farmers  for  so  much  rental 
value  as  has  been  already  taxed  out  of  them  in  excess  of  jus- 
tice? IiT'SUch  counties  the  revenue  from  a  single  tax  on  land 
values  wovild  be  sometimes  a  minus  quantity. 

The  old  farm  on  which  the  speaker  grew  up  has  lately  been  sold  for 
$25  an  acre.  The  soil  is  excellent,  the  buildings  substantial;  the  distance 
to  New  York  is  three  hundred  miles,  and  there  is  a  railroad  station  on 
one  corner. 

However,  it  may  be  expected  by  the  single  tax  apostles  that 
the  great  national  taxing  machine  would  equalize  such  things. 

The  enthusiasts  again,  make  no  allowances  for  those  dis- 
asters which  in  every  generation  wreck  cities,  dismantle  prov- 
inces, and  even  involve  continental  areas  in  vast  loss  and  ruin. 
Famine  is  chronic  in  India  and  China.^  In  the  latter  empire 
only  last  year  one  million  five  hundred  thousand  people  were 
left  homeless  and  starving  from  the  overflow  of  a  single  great 
river.  Would  the  single  tax  on  land  be  convenient  for  those 
poor  worms  of  the  dust?  If  no  other  tax  could,  without  injus- 
tice, be  collected,  would  the  government  of  that  province  be 
able  to  bury  the  dead?  A  very  few  years  ago,  several  counties 
lying  within  a  half  day's  journey  of  this  spot,  larger  in  aggre- 
gate area  than  any  one  of  several  considerable  nations,  were 
desolated  for  three  seasons  by  the  red-legged  grasshopper.  The 
surface  of  the  land  was  swept  as  clean  of  vegetation  as  the  pave- 
ments of  our  streets.  The  governor  of  this  state  locked  his  office 
door  for  many  days  and  hastened  to  see  what  might  be  done  for 


ECONOMIC  ADDRESSES  57 

the  stricken  people.  What  he  did  as  an  official  is  a  part  of  the 
history  of  the  state;  what  he  did  as  a  man,  is  known  only  to 
himself,  his  wife,  and  the  recording  angel.  How  distressing  it 
is  to  reflect  that  at  this  time  the  single  tax  doctrine  had  not  been 
revealed.  How  might  the  suffering  farmers  have  been  comforted 
by  that  sweet  doctrine  of  the  unearned  increment  and  the  single 
tax  on  rent,  which  would  relieve  them  of  the  last  burden,  their 
farms  themselves. 

Would  a  single  tax  on  the  unearned  increment  of  city  lots 
have  been  a  convenience  and  a  boon  to  the  people  of  New  Ulm 
and  Rochester  and  Sauk  Rapids,  after  the  tornado  had  got  in 
its  work  in  those  towns?  States,  like  men,  do  wisely  not  to 
carry  all  their  eggs  in  one  basket.  It  is  a  principle  of  taxing 
systems  to  distribute  the  burden  so  that  no  one  class,  nor  any 
kind  of  property  or  industry  shall  be  ruined  in  case  of  disaster. 
There  is  no  safety  valve  to  the  single  tax  boiler. 

Again,  these  devotees  of  a  mere  theory  assume  that  land  is 
the  only  thing  which  increases  in  value,  as  population  and  wealth 
increase,  if  they  do  increase;  and  which  derives  value  from  com- 
munity labor  and  social  demand.  It  is  a  hackneyed  truism  that 
increasing  demand  is  the  prime  force  in  raising  values  of  all 
products  (farms  and  gardens  are  products)  and  all  services. 
An  abounding  population,  if  it  swells  demand,  normally  occa- 
sions a  general  increase  of  prosperity  and  wealth.  According 
to  single  tax  philosophy  the  community  ought  to  appropriate 
to  the  common  good  whatever  moiety  or  scintilla  of  value  may 
have  been  caused  by  social  order,  protection,  education,  con- 
servation, or  other  contribution.  Let  us  take  a  single  instance, 
Mr.  George's  late  speech.  The  language  and  most  of  the  senti- 
ments of  that  ingenious  and  captivating  address  are  and  have 
for  a  long  and  indefinite  time  been  the  property  of  the  whole 
people.  He  spoke  with  a  degree  of  ease  and  confidence  to  in- 
dicate that  speaking  was  rather  a  pleasure  than  a  toil  for  him. 
He  got,  let  us  presume,  $100,  a  hundred  ounces  of  silver,  for  that 
performance,  and  carried  the  same  oflf  with  him  to  the  Standard 
office.  Now  what  gave  that  speech  its  selling  value  ?  Would  the 
Comanches,  or  the  Patagonians,  or  the  natives  on  the  left  bank  of 
the  Niger,  all  of  them  actual  practitioners  of  the  philosophy  which 
Mr.  George  is  commending  to  the  people  of  these  United  States, 
would  they  have  paid  their  currencies  to  hear   that   speech? 


58  WILLIAM  WATTS  FOLWELL 

"A  fortiori,  we  might  on  the  same  principle  (as  that  land  is  limited) 
insist  on  a  division  of  human  wit;  for  I  have  observed  that  the  quantity 
of  this  has  been  even  more  inconveniently  limited.  Mr.  George  himself 
has  an  inequitably  large  share  of  it."* 

Let  US  analyse  the  conditions  which  give  value  to  such  things 
as  Mr.  George's  orations.  First,  Mr.  George  enjoys  a  mo- 
nopoly of  a  certain  kind  of  reasoning  which  I  trust  will  remain 
his  exclusive  property.     I  allow  something  for  that. 

Next,  there  are  a  lot  of  people  in  this  town.  These  people 
are  civilized  and  possess  a  great  body  of  inherited  arts  and 
industries  which  have  long  been  common  property.  They  have 
had  themselves  educated  according  to  the  best  learning  of  all 
time  and  they  have  maintained  at  great  expense  a  costly  appa- 
ratus for  the  cultivation  of  religion  and  morality.  I  submit  that 
the  cash  value  of  that  speech  and  of  all  speeches  and  sermons  and 
orations  is  given  by  the  numbers,  the  labor,  the  saving,  the  vir- 
tue, andlprder  of  the  people,  and  that  Mr.  George  has,  accord- 
ing to  his  own  philosophy,  robbed  this  city  of  a  good  round 
sum  of  money.  In  the  next  place,  I  dissent  from  the  fundamen- 
tal assumption  of  the  single  tax  optimists, — that  all  land  belongs 
to  everybody.  The  statement  is  a  vague  and  glittering  gener- 
ality, or  perhaps  better  stated,  it  is  the  exaggeration  and  cari- 
cature of  a  doctrine  true,  but  only  true  within  reasonable  limi- 
tations, and  as  understood  by  reasonable  persons,  who  know 
and  feel  the  inadequacy  of  language  to  express  all  that  is  in  the 
minds  of  men.  We  assert  the  equality  of  all  men  and  we  under- 
stand those  words  in  a  certain  reasonable  way.  We  say  that 
governments  derive  their  just  powers  from  the  consent  of  the 
governed,  and  the  statement  is  true,  but  only  true  in  a  reason- 
able sense.  The  words  do  not  import  that  any  individual  or 
clique  or  party  may  withdraw  his  or  their  consent,  refuse  to  pay 
taxes  or  serve  on  juries,  or  that  resident  aliens,  minors,  paupers, 
and  idiots  may  vote.  The  state  in  a  certain  true  sense  owns  all 
its  territory,  but  the  state's  "eminent  domain"  does  not  con- 
flict with  the  right  of  citizens  to  own  lands  by  allodial  tenure. 
The  doctrine  that  the  land  of  the  world  belongs  to  God's  children 
is  a  harmless  truism.  What  is  it  good  for  in  actual  politics? 
Nothing.  It  is  a  mere  unworkable  sentiment,  void  of  all  effi- 
ciency; "Void"  as  lawyers  phrase  it,  "void  for  uncertainty." 
Only  a  limping,  one-legged  philosophy  of  property  can  bolster  up 


ECONOMIC  ADDRESSES  59 

such  a  vagary,  that  all  mankind  taken  collectively  owns  all  the 
soil  and  waters  of  the  planet. 

This  doctrine  may  never  have  been  stated  in  clearer  terms  than  by 
that  distinguished  apostle  of  temperance  and  anti-slavery,  Gerrit  Smith, 
in  his  speech  in  Congress  on  February  15,  1854,  and  in  resolutions  offered 
by  him  on  January  16.     The  resolutions  read:  . 

"Whereas  all  the  members  of  the  human  family,  notwithstanding  all 
contrary  enactments  and  arrangements,  have  at  all  times,  and  in  all 
circumstances,  as  equal  a  right  to  the  soil,  as  to  the  light  and  air,  because 
as  equal  a  natural  need  of  the  one  as  of  the  other;  and  whereas,  this  in- 
variably equal  right  to  the  soil  leaves  no  room  to  buy,  or  sell,  or  give  it 
away;  therefore, 

1.  Resolved,  that  no  bill  nor  proposition  should  find  favor  with  Con- 
gress which  implies  the  right  of  Congress  to  dispose  of  the  public  lands, 
or  any  part  of  them,  either  by  sale  or  gift. 

2.  Resolved,  that  the  duty  of  civil  government  in  regard  to  public 
lands,  and  indeed  to  all  lands,  is  but  to  regulate  the  qccupation  of  them; 
and  that  this  regulation  should  ever  proceed  upon  the  principle  that  the 
right  of  all  persons  to  the  soil, — to  the  great  source  of  human  subsis- 
tence,— is  as  equal,   as  inherent,  and  as  sacred  as  the  right  to  life  itself." 

In  his  speech  Mr.  Smith  demanded  in  the  name  of  justice  that  gov- 
ernment should  cease  from  selling  or  giving  away  what  it  can  not  own, 
the  soil,  and  said,  "Vacant  land  belongs  to  all  who  need  it.  It  belongs  to 
the  landless  of  every  clime  and  condition." 

Gerrit  Smith  antedated  Mr.  George  a  whole  generation. 

Property  right  is  an  institution,  an  immemorial  inheritance, 
not  a  theory.  Rights,  practical,  reasonable,  legal,  rights  do  not 
descend  from  the  clouds;  they  have  grown  up  out  of  human 
experience  and  the  nature  of  things. 

These  dreamers  fall  into  another  error,  after  the  example  of 
the  socialists.  They  confuse  value  and  utility.  They  talk  of 
value  where  no  exchanges  take  place,  and  of  labor  and  capital 
producing  value.  Value  appears  only  on  the  field  of  exchange, 
not  in  that  of  production.  Much  labor  is  not  simply  negatively 
useless,  but  positively  destructive,  as  for  example  that  employed 
on  perpetual  motion  devices,  in  gambling,  in  the  manufacture 
and  sale  of  intoxicants,  and  the  culture  of  tobacco.  In  their 
discussions  they  get  themselves  into  such  a  tangle  with  their 
values — land-values,  rental-values,  real-values,  selling-values, 
real  selling-values,  speculative  values,  that  the  ordinary  intellect 
can  not  follow  them,  and  political  economists  retire  in  despair. 

Finally  (under  this  head)  these  amiable  proselytes  neglect  to 
take  any  account  of  probable  political  consequences  of  their 


60  WILLIAM  WATTS  FOLWELL 

scheme,  provided  it  were  possible  to  clear  the  way  for  it.  It  is 
a  common  experience  of  nations  that  changes  in  their  economic 
institutions  are  followed  by  totally  unexpected  consequences;  so 
short  is  the  sight  of  the  wisest  men.  But  there  is  one  consequence 
of  the  scheme  under  discussion  which  experience  may  warn  us 
from  risking.  Put  all  your  taxes  on  any  one  class  of  persons, 
and  you  at  once  consolidate  the  members  of  it  .into  a  compact 
body  ready  either  to  embarrass  and  oppose  the  government  or 
to  take  possession  of  the  powers  of  the  state  and  dictate  the 
laws.  I  hardly  know  which  of  these  inevitable  alternatives  is 
more  to  be  feared.  If  the  class  selected  be  the  landholding 
people,  and  they  embrace  a  large  majority  of  the  voters  I  think, 
all  experience  teaches  that  they  will  siirely  and  rapidly  establish 
themselves  as  the  ruling  class  in  the  state.  In  this  day  of  large 
production  when  the  fashion  of  large  farms  worked  by  machin- 
ery' is  coming  into  vogue,  I  am  persuaded  you  would  not  have 
long  to  wait  before  a  landed  aristocracy  showed  its  powerful 
grip  up6n  your  legislative  department,  placed  its  best  men  in 
your  executive  chairs  and  fiUed  the  bench  of  your  supreme  tri- 
bunals with  judges  whom  it  could  depend  upon.  Mr.  George 
himself  suggests  the  best  reason  of  all  for  expecting  this  result 
when  he  says,  ''The  tax  on  land  values  is  the  only  tax  of  any 
importance  that  does  not  distribute  itself.  It  falls  upon  the 
owners  of  the  land  and  there  is  no  way  in  which  they  can  shift 
the  burden  upon  any  one  else."^ 

Mr.   George  does  not  propose  to  dispossess  landlords,  and    reduce 
them  to  the  condition  of  tenants  of  the  state  or  municipality.' 

He  was  thinking  as  an  economist  not  as  a  politician.  Lay 
the  taxes  on  landlords  and  you  may  trust  the  real  estate  law^-ers 
to  find  them  a  political  way  of  escape  from  excessive  burdens  at 
least.  It  is  with  difficulty  the  people  now  submit  to  direct  taxa- 
tion in  amounts  stifficient  to  support  those  institutions  which 
modem  states  must  needs  maintain.  The  public  schools  are  ill- 
equipped,  the  teachers  poorly  paid.  The  tmiversity  lags  half  a 
centur>^  behind  the  jxjint  to  wliich  she  might  advance  in  ten 
years  if  the  money  cotild  be  voted.  Do  you  think, things  would 
be  bettered  if  you  placed  the  fortimes  of  the  state  in  the  hands 
of  the  landholding  class  ?  That  class  would  name  the  assessors, 
and  dictate  the  rates  and  the  valuations,  or  human  nature  will 


ECONOMIC  ADDRESSES  61 

have  iindergone  a  new  creation.  From  class  government,  good 
Lord,  deliver  us,  evermore.  I  submit  therefore  that  the  single 
tax  on  land  values  as  a  theory  fails  to  answer  to  the  require- 
ments of  a  reasonable  system  of  taxation  considered  at  large 
in  the  abstract. 

Mr.  George  makes  great  account  of  the  irregularities  which 
attend  the  taxing  systems  in  vogue,  and  he  says  much  that  is 
worth  while.  The  science  of  government  and  in  particular  the 
economics  of  government  are  not  far  advanced.  In  the  past 
the  science  has  been  cultivated  by  a  few  philosophers  only. 
Economics  has  of  late  become,  or  is  becoming,  the  science  of  the 
people,  and  there  is  ground  for  hope  that  valuable  truths  will  be 
brought  forth  and  useful  devices  invented  to  make  government 
more  efficient  and  its  burdens  lighter.  I  must  say,  however,  that 
the  suggestions  and  the  reasonings  of  the  school  I  am  now  deal- 
ing with  are  discouraging.  Because  nine  ways  are  bad  it  does 
not  follow  that  a  tenth  will  certainly  be  good.  Because  the 
household  pet  of  the  Dutchman's  story  is  utterly  worthless  in 
all  known  respects  it  is  not  safe  to  conclude  that  he  will  be  infal- 
lible as  a  "coon  dog"  till  you  have  tried  him.  The  collecting  of 
taxes  on  moneys  and  credits  may  be  very  unsatisfactory,  but  we 
may  not  conclude  from  that  that  a  single  tax  on  land  values  will 
be  satisfactory.  And  these  men  make  the  radical  mistake  of  all 
enthusiasts,  in  presuming  that  the  adoption  of  their  one  idea  will 
mend  all  matters.  Criss-cross,  hocus-pocus,  presto  change,  now 
you  see  it  and  now  you  don't  see  it,  and  the  miracle  is  done. 
"We  believe,"  says  Mr.  George,  in  substance^  "that  in  this 
simple  measure  of  the  single  tax  lies  the  remedy  for  the  great 
social  and  political  evils  of  our  time."  This  is  not  the  language 
of  truth  and  soberness,  it  is  the  wild  exclamation  of  the  devotee 
of  one  idea. 

Before  I  had  gone  far  in  this  matter  I  was  inclined  to  think 
that  the  single  tax  might  work  in  some  petty  state,  some  remote 
and  happy  isle,  some  secluded  mountain  gorge,  (whence  popu- 
lation could  escape  only  by  the  golden  stairs)  and  where  the  pas- 
sions of  men  woiild  not  be  stirred  by  the  storms  that  sweep  over 
great  nations.  With  regret  I  am  forced  to  abandon  this  amiable 
conceit,  because  natiire  is  against  it  and  humanity  is  now  inca- 
pable of  the  virtues  it  implies.  For  the  realization  of  their  dream 
I  can  only  point  our  single  tax  friends  to  some  heavenly  consum- 


62  WILLIAM  WATTS  FOLWELL 

mation,  to  some  "Happy  land,  Far,  far  away,  Where  saints  in 
glory  stand,  Bright,  bright  as  day."  Again  my  good  nature  gets 
the  better  of  my  judgment;  in  the  celestial  country  there  can 
be  no  single  tax,  or  double  tax,  no  mortgages  to  be  sworn  off,  no 
personal  chattels  or  credits  to  be  listed,  no  tax  on  conscience 
there.  Oh,  sweet  and  blessed  country,  Where  taxes  ne'er  shall 
be!  Perish  the  thought  which  rises  here  like  Banquo's  ghost  and 
will  not  down  at  my  bidding.  There  is  but  one  other  place  where 
population  is  ever  on  the  increase  and  whence  emigration  is  im- 
possible. Perhaps  in  that  unmentionable  realm  the  unearned 
increment  of  land  may  form  a  common  fund  sufficient  for  all 
social  needs.     No  one  can  object  to  the  experiment  there. 

In  the  first  division  of  this  address  I  undertook  to  show  that 
the  single  tax,  can  not  be  put  in  operation  in  our  country  and 
time.  In  the  second,  that,  resting  on  unfounded  assumptions, 
it  has  no  merit  as  an  ideal  plan  of  taxation.  In  the  few  minutes 
remainii^  at  my  disposal  I  propose  to  show  that  the  single-tax 
plan  is  not  a  plan  of  taxation  at  all  in  the  proper  sense  of  the 
word,  and  further  that  Mr.  George  did  not  originally  propose  the 
scheme  as  a  scheme  of  taxation  proper.  What,  let  me  ask,  are 
taxes  in  free  states  ?  When  the  English  commons  were  debating 
the  question  of  taxing  the  colonies.  Lord  Chatham  answered  this 
question  and  settled  it  for  English  speaking  freemen,  for  all 
time.  Taxes  in  free  states  are  not  impositions  on  the  people 
by  outside  and  superior  powers,  they  are  the  contributions  of 
the  citizens  for  public  uses.  The  idea  that  taxes  are  a  burden 
let  down  onto  the  people,  is  a  survival  from  the  great  conquering 
empires  of  antiquity.  It  ought  to  have  no  place  in  the  minds 
of  intelligent  modem  thinkers.  There  two  ideas  inherfe  in  the 
word  tax,  or  rather  two  phases  of  one  idea.  The  word  at  bot- 
tom, means  to  set  in  order,  to  arrange;  and  we  have  on  the  one 
hand  the  principle  that  taxes  must  be  proportioned  to  the 
public  needs,  and  on  the  other  apportioned  equitably  among 
the  persons  who  are  to  contribute. 

.    The  ultimate  root  is  tag,  to  which  may  be  traced  the  words  task, 
touch,  the  Latin  tangere,  and  the  Greek  tasso. 

These  principles  are  reasonable  and  in  our  day  beyond  dis- 
pute. No  free  people  will  for  a  moment  consent  that  their 
agency,  the  government,  may  assess  and  collect  taxes  ad  lihi- 


ECONOMIC  ADDRESSES  63 

turn  without  regard  to  the  purposes  and  duties  of  government. 
Nor  will  a  wise  people,  by  imposing  the  burdens  of  the  state  on 
any  one  class,  lay  the  foundation  for  a  claim  by  that  class  to 
rule  the  state. 

Exactions  of  money,  goods,  or  services  not  proportioned  to 
public  uses  and  not  apportioned  to  private  ability  and  interest 
are  not,  in  any  just  sense  of  the  word,  taxes.  Keeping  this  in 
mind  let  us  examine  Mr.  George's  position.  The  disciples  of 
this  teacher  are  insistent  in  season  and  out  of  season  in  com- 
mending the  book  Progress  and  Poverty  as  containing  the  whole 
gospel  according  to  Saint  George.  It  is,  indeed,  a  notable 
book.  The  author  has  a  happy  art  of  elucidating  abstruse 
economic  doctrine  by  ingenious  statement  and  happy  illustra- 
tion. His  literary  style  is  forceful,  graphic,  and  generally  chaste. 
The  best  qualities  of  the  man,  his  ardent  love  of  humanity  and 
his  burning  desire  to  be  of  present  service  to  all  who  toil  and 
moil,  shine  on  every  page,  but,  I  am  forced  to  add,  these  merits 
only  throw  into  strange  relief  the  fallacy  of  his  reasoning.  One 
can  not  but  regret  the  mistaken  direction  of  splendid  gifts. 
The  fundamental  assumption  of  this  book  is  the  one  suggested 
by  the  title  that  human  progress,  under  existing  conditions,  is 
necessarily  accompanied  by  poverty,  deepening,  widening,  irre- 
mediable poverty.  This  point  we  will  not  argue  now.  We  will 
grant  it  for  the  moment.  After  laboring  through  several  chap- 
ters with  technical  discussions  of  wages,  interest,  capital,  and 
the  population  question  to  clear  his  way,  Mr.  George  at  length 
offers  us  the  sole  reason  why  poverty  keeps  pace  with  progress; 
that  rent  (i.e.,  land  value)  is  always  on  the  increase  at  the 
expense  of  wages.  Landlords  must  always,  if  present  institu- 
tions continue,  be  growing  richer  at  the  expense  of  labor.  Well 
I  will  not  now  contend  about  this.  We  may  agree  that  evils 
exist,  and  disagree  as  to  remedies. 

Addressing  himself  to  the  question  of  remedies  our  genial 
apostle  argues  in  detail  that  the  following  proposed  remedies 
are  of  no  avail,  against  the  impoverishment  of  the  people.* 

1.  Greater  economy  in  government 

2.  Better  education,  and  improved  habits 

3.  Combinations  of  workmen 

4.  Cooperation  of  labor  and  capital 

5.  Governmental  direction  and  interference 


64  •  WILLIAM  WATTS  FOLWELL 

6.  More  general  distribution  of  land 

To  these  remedies,  proposed  by  men  as  wise  and  philan- 
thropic, perhaps  as  Mr.  George,  he  will  allow  no  efficacy,  not 
even  a  modifying  or  mitigating  efficacy.  They  block  the  way, 
he  declares,  to  the  bringing  in  the  sole  and  single  remedy  for 
poverty  and  its  attending  misery  and  crime,  which  he  carries 
in  his  medicine  case.  On  page  295,  he  states  this  remedy 
frankly  in  loud  italic  type  ''We  must  make  land  common 
property  J"  This  is  the  bottom  doctrine  of  the  single  tax  men. 
This  is  the  gospel  according  to  Saint  George. 

In  book  seven,  the  author  of  Progress  and  Poverty  proceeds 
to  argue: 

1.  that  private  property  in  land  is  unjust; 

2.  that  its  ultimate  result  is  the  enslavement  of  laborers; 

3.  that  private  land  owners  have  no  claim  on  society  for 
compen|ation  for  lands  they  pretend  to  own,  because  they  are 
either  robbers,  or  the  successors  and  grantees  of  robbers. 

On  page  322,  he  says,  "Private  property  in  land  is  a  bold, 
bare,  enormous  wrong  like  that  of  chattel  slavery."  Unsub- 
stantial as  such  propositions  may  be,  I  can  not  turn  from  my 
present  purpose  to  deal  with  them.  Private  property  in  land 
is,  in  Mr.  George's  opinion,  the  sole  cause  of  (I  quote) 

"Want  and  suffering   ....   among  working  classes  .... 

"Industrial  depression" 

"Scarcity  of  employment   .    .    .    ." 

"Stagnation  of  capital" 

"The  tendency  of  wages  to  the  starvation  point."' 

For  these  vast,  complicated,  perennial,  and  appalling  evils 
he  sees  but  one  remedy;  a  panacea,  a  patent  ointment,  a  wiz- 
ard oil,  and  that — "Common  property  in  land."  How  then 
shall  we  compass  it?  he  feels  bound  to  inquire.  I  quote  from 
his  reply  "We  should  satisfy  the  law  of  justice,  we  should  meet 
all  economic  requirements,  by  at  one  stroke  abolishing  all  private 
titles,  declaring  all  land  public  property,  and  letting  it  out  to 
the  highest  bidders  in  lots  to  suit,  under  such  conditions  as 
would  securely  guard  the  private  right  to  improvements."^" 
"But  such  a  plan,  though  perfectly  feasible,  does  not  seem  to 
me,"  Mr.  George  continues,  "the  best,  or  rather  I  propose  to 
accomplish  the  same  thing,  in  a  simpler,  easier,  and  quieter 
way  than  that  of  formally  confiscating  all  the  land  and  formally 


ECONOMIC  ADDRESSES  65 

letting  it  out  to  the  highest  bidders I  do  not  propose 

[he  proceeds]  either  to  pvirchase  land  or  to  confiscate  private 
property  in  land.  The  first  would  be  unjust;  the  second,  need- 
less. Let  the  individuals  who  now  hold,  still  retain  if  they  want 
to,  the  possession  of  what  they  are  pleased  to  call  their  land. 
Let  them  continue  to  call  it  their  land.  Let  them  buy  and  sell, 
and  bequeath  and  devise  it.  We  may  safely  leave  them  the 
shell,  if  we  take  the  kernel.  It  is  not  necessary  to  confiscate 
land;  it  is  only  necessary  to  confiscate  rent."^^  Here  we  have 
it,  the  core  and  essence  of  the  single  tax  philosophy.  Confisca- 
tion, frankly  and  boldly,  confiscation,  Mr.  George  proclaims  to 
be  his  aim. 

Now  confiscation  and  taxation  are  not  the  same  thing,  they 
are  diverse  and  irreconcilable  things.  Taxation  implies  pro- 
portionment  to  public  uses  and  apportionment  to  private  ability 
and  interest.  Confiscation  means  forfeiture,  transfer  by  force 
and  arms  to  the  public  treasury,  without  any  reference  to,  or 
regard  for,  the  public  needs.  Mr.  George  will  be  personally 
content  with  proximate  confiscation  of  rent,  because  he  knows 
it  leads  to  ultimate  confiscation  of  land.  He  does  not  like  racket 
and  disturbance,  and  personally  chooses  the  simple,  easy,  and 
quiet  way  of  confiscating  rent  instead  of  an  honest,  thorough, 
rough-and-ready  plan  of  universal  eviction.  A  very  important 
question  arises  here.  It  has  many  times  happened  in  the  his- 
tory of  evolutions  that  the  early  leaders,  alarmed  at  impending 
consequences,  unexpected,  at  some  crucial  moment,  shrink  from 
the  logic  of  their  premises,  turn  conservative  and  the  command 
passes  to  less  scrupulous  men.  Mr.  George  seems  to  be  such  a 
leader.  He  is  now  engaged  with  all  the  passion  of  a  saint  and 
a  devotee,  in  persuading  the  poor,  that  their  poverty  proceeds 
from  the  private  ownership  of  land.  He  tells  wage  workers, 
that  landlords  are  robbing  them  and  will  go  on  robbing  them 
to  eternity,  imless  they  smash  the  institution  of  private  prop- 
erty in  land.  He  is  earnest,  eloquent,  continuing  instant  in 
his  holy  crusade.  Suppose  Mr.  George  to  be  successful  in  rally- 
ing to  his  cross  and  banner  enough  thousands  of  the  working 
men  of  America  to  carry  his  revolution  at  the  polls.  Does  Mr. 
George  offer  us  any  guaranty  that  he  will  then  be  able  to  con- 
trol the  wild  spirits  which  will  surround  and  support  him  ?  Will 
he  be  able  to  curb  their  wild  ardor  and  persuade  them  to  adopt 


66  WILLIAM  WATTS  FOLWELL 

the  easy,  simple,  and  quiet  way  of  doing  the  deed  ?  The  history 
of  great  social  revolutions  offers  no  hope  of  such  a  consumma- 
tion. When  you  break  the  dam  and  let  the  waters  loose,  no 
human  power  can  stay  their  course.  But  Mr.  George  not  only 
desires  to  spare  his  fellow  countrymen  the  unpleasantnesses 
which  would  attend  the  turning  of  everybody  out  of  doors  and 
putting  all  our  homes  up  at  auction,  he  is  so  tender  and  amiable 
that  he  will  not  even  scare  the  good  people  with  a  naughty  word. 
That  word  confiscation,  a  truly  horrid  malodorous  word,  he 
hastens  to  suppress,  by  another  which  can  hold  up  its  head  in 
any  respectable  circle.  Hear  these  comfortable  words:  "What 
I,  (Henry  George)  therefore  propose,  as  the  simple,  yet  sover- 
eign remedy,  which  will 

raise  wages 

increase  the  earnings  of  capital 

extirpate  ■  pauperism 

aboftsh  poverty 

give  remunerative  employment  to  whoever  wishes  it 

afford  free  scope  to  himian  powers 

lessen  crime 

elevate  morals,  and  taste,  and  intelligence 

purify  civilization  to  yet  nobler  heights 
is  to  appropriate  rent  by  taxation."^^ 

Is  it  honest,  Mr.  George,  to  say  taxation  when  you  mean 
confiscation?  Can  you  fool  the  four  million  farm  owners  of 
this  land  and  get  them  to  make  believe  they  own  those  home- 
steads after  your  confiscating  machine  shall  have  knocked  all 
exchange  value  out  of  land?  Will  they  not  understand  as  well 
as  you  do  that  "this  simple  device  of  placing  all  taxes  on  the 
value  of  land"  will  "be  in  effect  putting  up  the  land  at  auction 
to  whoever'-  will  "pay  the  highest  rent  to  the  state ?"^^ 

Mr.  George's  disciples  in  this  region  are  now  laboring  to 
show  that  confiscation  and  taxation  do  not  differ,  that  the  state 
confiscates,  when  it  taxes.  Have  they  lost  the  power  of  under- 
standing ordinary  language?  In  all  this  fine  talk  about  appro- 
priating rent  by  taxation,  there  is  no  suggestion  of  limiting  the 
collections  to  the  public  needs.  The  proposition  is  to  confiscate 
the  whole  rental  value.  I  quote:  "In  every  civilized  country, 
even  the  newest,  the  value  of  land  taken  as  a  whole  is  sufficient 
to  bear  the  entire  expenses  of  government.     In  the  better  devel- 


ECONOMIC  ADDRESSES  67 

Oped  countries  it  is  more  than  sufficient.  Hence  it  will  not  be 
enough  merely  to  place  all  taxes  on  the  land.  It  will  be  nec- 
essary, when  rent  exceeds  the  present  governmental  revenues, 
to  commensurately  increase  the  amount  demanded  in  taxation, 
and  to  continue  this  increase  as  society  progresses"  .  .  .  this 
is  "understood  in  the  proposition  to  put  all  taxes  on  the  value 
of  lands. "^*  Call  you  this,  taxation?  The  arming  your  gov- 
ernment with  power  to  collect  from  year  to  year  sums  of  money 
in  excess,  to  begin  with,  of  the  present  public  uses,  and  increase 
from  year  to  year  and  generation  to  generation?  "There  would 
be  a  great  and  increasing  surplus  revenue,"  adds  the  author  of 
Progress  and  Poverty,  "from  the  taxation  of  land  values,  for 
material  progress  .  .  .  would  tend  constantly  to  increase  rent. 
This  revenue  arising  from  the  common  property  could  be  applied 
to  the  common  benefit,  as  were  the  revenues  of  Sparta.  We 
might  not  establish  public  tables,  they  would  be  unnecessary" 
(query?)  "but  we  could  establish  public  baths,  museums,  libra- 
ries, gardens,  lecture  rooms,  music  and  dancing  halls,  shooting 
galleries,  play  grounds,  gymnasiums,  etc.  .  .  .  We  should 
reach  the  ideal  of  the  socialist  ....  Government  would  change 
its  character  and  would  become  the  administration  of  a  great 
cooperative  societv.^" 

The  government  will  never  exist,  I  submit,  which  any  free 
people  will  entrust  with  a  power  to  raise  surplus  revenue  increas- 
ing annually  to  all  eternity. 

The  language  of  Mr.  George's  addresses  in  this  vicinity, 
though  ingenious  and  guarded,  is  entirely  consistent  with  that 
of  his  book.  He  used  no  such  naughty  word  as  confiscation; 
that  would  have  shocked  people.  But  he  spoke  of  a  tentative 
and  entering  wedge,  and  dropped  mysterious  suggestions  of  a 
theoretic  perfection  to  be  at  length  attained  to.  His  theoretical 
perfection  "we  now  understand  to  be  the  actual  or  the  virtual 
confiscation  of  land  and  making  it  the  common  property  of  the 
state."  As  reported  in  the  daily  papers,  Mr.  George  also  said, 
"No  one  ought  to  be  permitted  to  hold  land  that  has  a  value" 
and  "I  think  it  necessary  to  take  the  entire  rent  value  of  land 
in  order  to  fully  carry  out  the  justice  of  the  single  tax." 

I  trust  I  have  made  good  my  promise  to  show  that  the  scheme 
of  a  so-called  single  tax  on  land  values,  as  proposed  and  advo- 
cated by  Mr.  George  is  not  in  the  proper  sense  of  the  word  a 


6S  WILLIAM  WATTS  FOLWELL 

scheme  of  taxation,  but  is  simply  a  device  to  work  the  destruc- 
tion of  the  institution  of  private  property  in  land,  to  change  the 
character  of  our  government,  and  work  a  revolution  in  society, 
whose  consequences  no  human  intelligence  can  foresee.  These 
pirrposes  Mr.  George  boldly  avows.  I  wish  all  his  followers  had 
equal  courage  and  better  sense. 

The  hour  is  passing.  There  is  no  space  to  enter  on  a  defense 
of  private  property,  nor  am  I  now  called  upon  to  apologize  for 
ownership  of  homes  and  farms,  and  gardens  and  orchards.  Pri- 
vate property  in  land  is  an  ancient  and  venerable  institution  of 
gradual  historic  development.  It  is  not  a  theory,  but  it  has  a 
foundation  on  solid  facts  and  reasonable  principles.  Mr.  George 
is  half  right,  that  is  all  wrong,  in  basing  property  right  on  human 
labor  alone.  Men  own  what  they  make;  and  this  means  to  him 
the  same  thing  with  men  may  not  own  what  they  do  not  make. 
Men  make  canoes,  plows  and  looms;  therefore  they  may  own 
canoes, 4j)lows  and  looms.  Men  do  not  make  land;  therefore 
they  may  not  own  land.  What  kind  of  logic  is  this?  Let  us 
try  some  more  examples: 

I  love  my  wife  and  children;  therefore  I  hate  all  the  rest  of 
mankind. 

A  tax  on  land  is  a  good  tax ;  therefore  all  other  taxes  are  bad. 

There  is  dishonesty  in  working  the  personal  property  tax; 
therefore  there  will  be  none  in  working  the  single  land  tax. 

All  teachers,  preachers,  statesmen,  and  philosophers  have 
failed  to  abolish  sin  and  wrong;  therefore  Henry  George  can  do  it. 

These  open  and  apparent  fallacies  are  of  a  piece  with  Mr. 
George's  logical  jingle;  arguments  just  as  valid  as  his. 

Ownership  is  a  fact  founded  partly  on  individual  claim, 
partly  on  social  claim.  Men  own  what  they  make  if  the  laws 
allow.  Some  counterfeiters  make,  i.e.,  create,  very  beautiful 
plates  for  printing  national  banknotes,  and  the  impressions  are 
only  distinguishable  by  reason  of  their  superior  elegance.  The 
United  States  marshal  takes  possession  for  all  that,  and  brings 
the  makers  to  answer  at  the  criminal  bar.  Property  law  sup- 
ports private  right,  in  the  act  of  asserting  coordinate  social 
right.  For  ages  the  institution  of  property  in  land  has  made 
its  way.  Its  origin  marked  the  emergence  of  men  out  of  bar- 
barism into  civilization.  Savages  and  barbarians  everywhere 
are  communists  in  land.     Hunting,   fishing,   and  pastoral  life 


ECONOMIC  ADDRESSES  69 

make  them  nomadic.  Civilized  men  settle  on  the  land,  and 
live  by  cultivation.  The  state  begins  when  settlements  begin. 
Long  experience  has  shown  that  secure  tenure  is  essential  to 
good  cultivation.  Tenants  at  will  rob  the  soil  and  impoverish 
the  state.  Owners  in  fee  plow  deep  and  beautify  for  posterity. 
Land  lying  remote  and  waste  is,  of  course,  without  value. 
Land,  appropriated,  enclosed,  subdued,  and  tilled  becomes  by 
the  union  of  private  effort  with  society's  magical  potency  the 
dearest  wealth  of  man.  The  very  soil  becomes  the  depository 
of  our  earnings  and  savings.  This  is  a  priceless  blessing  to 
humanity.  I  care  not  what  the  brisk  young  men,  who  are 
shouting  for  the  single  tax,  may  think  about  this.  I  will  speak 
for  myself  and  I  believe  I  speak  for  the  great  body  of  men  who 
live  upon  what  they  earn.  Over  in  a  part  of  this  city  there  is  a 
little  homestead.  It  stands  for  the  earnings  of  man  and  boy, 
for  the  little  daily  self-denials  and  economies  of  the  wife.  It 
holds  the  savings  of  fifty  years,  a  sacred  deposit  under  the  con- 
stitution of  our  country,  and  the  immemorial  custom  of  our 
race,  for  the  shelter  and  support  of  a  family,  should  death  or 
disaster  overtake  its  now  happy  owner.  If  that  owner  shall 
ever  in  any  moment  of  folly  raise  his  voice,  or  lift  his  hand, 
or  cast  a  vote,  which  shall  knock  the  value  out  of  that  little 
homestead,  may  his  right  hand  forget  her  cunning,  and  may  his 
tongue  cleave  to  the  roof  of  his  mouth.  I  am  not  here  to  apolo- 
gize for  abuses  of  property  or  the  imperfection  of  our  existing 
ways  and  means  of  taxation.  They  need  reform.  Every  serious 
proposition  to  that  end  deserves  our  hospitality.  I  do  not 
therefore  regret  the  agitation,  now  becoming  extensive,  begiin 
by  Mr.  George.  I  have  no  fears  that  the  American  people  will 
take  the  back  track  towards  barbarism.  The  agitation  will  stir 
the  air  of  stagnant  public  opinion,  and  lift  the  fog,  and  let  the 
daylight  in. 


NOTES 

^  Works     3:260.     Boston.     1889. 
But  Burke  was  anticipated  in  the  Hitopadeska  by  many  centuries. 

*  Alexis  de  Tocqxieyiile,  De  la  Democratie  en  Amirique     1:76.     Paris.     1864. 

*  Annt^  Register   1887  p.  323;   1889  p.  360. 

*  J.  R.  to  well.  Essay  on  Democracy. 

*  H.  George,  Progress  and  Poverty     p.  384.     New  York.     1882. 
•Ibid.  364. 

^Ibid.  296. 
*Ibid.  269-70. 
*Jbid.  362. 
"  Ibid. 
^  Ibid.  364. 
« Ibid. 
"Ibid.  392. 
I*  Ibid.  365. 
»Ibid.  410. 


SOCIALISM  TRUE  AND  FALSE 


< 


SOCIALISM  TRUE  AND  FALSE 

Proudhon,  the  French  sociaHst,  challenged  the  quiet  citizens 
of  his  day  with  the  audacious  inquiry  "What  is  Property?" 
To  this  question  he  was  ready  with  the  more  audacious  reply, 
"Property  is  robbery."^  The  socialists  of  the  Proudhon  school 
held  that  ownership  is  always  and  everywhere  unjust.  No  man 
can,  in  their  view,  acquire  title  to  anything  on  earth  other  than 
that  got  by  the  spectator  in  a  theatre^  the  right  to  sit  and  see 
the  show  and  then  depart.^     Property  survived  this  attack. 

Again  in  our  day  new  assaults  hardly  less  alarming  are  made 
upon  property.  The  disciples  of  Karl  Marx  demand  the  aboli- 
tion of  private  ownership  in  land,  raw  materials,  and  machines; 
i.e.,  all  the  instnmients  of  production.  The  state  should  be 
sole  owner  of  these,  and  so  the  sole  capitalist.  A  body  of  Amer- 
ican agitators  led  by  Henry  George,  the  Englishman,  are  con- 
tent to  deny  the  rightfulness  of  property  in  land;  and  propose 
by  means  of  a  scheme  of  "confiscation  of  rent"  to  abolish  pov- 
erty, extirpate  crime,  and  raise  humanity  to  a  lofty  level  of 
intelligence  and  virtue.^  Such  attacks  may  not  seem  so  alarm- 
ing as  the  bolder  one  of  the  French  socialist,  Proudhon,  but 
they  really  raise  the  same  central  question;  the  property  ques- 
tion. The  questions  "Who  may  own?"  And  "What  may  be 
owned?"  can  only  be  settled  after  determining  why  anybody 
may  own  anything 

The  immemorial  right  of  private  ownership  is  thus  called  in 
question  by  so  many  people,  of  such  respectability,  and  with 
such  emphasis  and  ingenuity,  that  we  are  forced  to  deal  with  it 
as  an  open  question.  Some  phase  of  socialism  is  sure  to  be 
"up"  in  every  social  meeting,  every  public  discussion.  A  ntmi- 
ber  of  ministers  of  the  gospel,  by  no  means  small,  and  eminent 
for  learning  and  devotion  are  preaching  socialism,  the  socialism 
of  Jesus  and  the  early  church  as  they  conceive  it.  Some  of 
them  avow  themselves  converts  to  some  form  of  Marxism. 
An  aspiring  political  party  has  demanded  our  votes  from  a 
platform  of  socialistic  planks,  many  in  number,  and  of  great 
social  and  economic  import. 

The  series  of  "planks"  of  the  platform  adopted  by  the  Omaha  Con- 
vention of  the  Peoples'  Party,  July  4,  1892,  included: 


74  WILLIAM  WATTS  FOLWELL 

The  free  coinage  of  silver, 
The  abolition  of  national  banks, 
An  elaborate  sub-treasury  scheme, 
A  graduated  income  tax, 
Government  paper  money  in  liberal  amounts, 
Government  ownership  of  railroads,  telegraphs,  and  telephones, 
Prohibition  of  alien  land-holding. 
Direct  election  of  United  States  senators. 
Limitations  of  revenues  to  expenses,  state  and  national, 
Eight  hour  working  day, 
Postal  banks, 

Liberal  pensions  to  sailors  and  soldiers. 
Regulation  of  immigration. 
Nine  planks  were  borrowed  from  that  of  the  Socialist  Party. 

If  you  examine  the  questions  thus  raised  you  will  find  them, 
without  exception,  property  questions.  I  propose,  therefore, 
that  we  devote  a  part  of  the  hotir  we  are  to  spend  together  to 
an  examination  of  the  central  question,  "What  is  property  and 
how  has  it  come  to  be  what  it  is?"  Here,  no  smart,  evasive, 
question-bdgging  epigram,  like  Proudhon's  "Property  is  rob- 
bery/' is  of  any  avail,  as  a  means  of  reaching  the  truth. 

Let  us  start  with  the  simple  proposition,  which  the  uttermost 
socialist  can  not  deny,  that  Property  is  an  institution.  Property 
is  an  institution.  Let  us  be  sure  we  know  just  what  we  mean 
here.  There  is  plenty  of  loose  talk  about  institutions;  "our  free, 
glorious,  time-honored,  blood-bought,  consecrated  institutions" 
and  the  like,  with  but  little  clear  sense,  I  fear  of  what  that  fine 
word  may  mean.  The  word  institution  comes  from  a  root 
sta  common  to  all  the  languages  of  the  Aryan  or  Indo-European 
stock,  and  the  meaning  of  that  root  is  simply  to  stand.  From 
this  root  by  an  intensive  prefix  in  and  a  causative  affix  tu  we 
get  the  verb  to  institute,  with  the  meaning,  to  cause  to  stand, 
to  set  up,  to  establish.  The  addition  of  another  syllable  tion 
gives  us  the  word  institution,  which,  in  its  intransitive  sense, 
means  simply  that  which  has  been  made  to  stand,  that  which 
has  been  and  remains  established;  with  many  shades  of  mean- 
ing according  to  its  application;  such  as  to  a  body  of  laws,  like 
those  of  Solon  or  Lycurgus;  to  some  religious  ceremonial  like 
the  eucharist  or  baptism;  or  a  permanent  establishment  for  the 
diffusion  of  knowledge,  like  the  Smithsonian  Institution. 

Institutions  are  to  society  what  habits  are  to  individuals, 
and  much  more,  they  are  the  very  bond  and  cement  of  society. 


ECONOMIC  ADDRESSES  75 

But  for  institutions,  men  would  have  remained  mere  wandering 
savages,  contending  for  life  and  subsistence  with  the  tiger,  the 
wild  boar,  and  the  wolf.  To  the  institutions  of  language,  the 
family,  the  church,  and  the  state,  we  owe  all  that  is  meant  by 
the  word  civilization.  Do  we  ?  No,  we  must  add  the  institution 
of  property,  and  then  our  broad  assertion  may  stand. 

Let  us  not  here  make  the  mistake  of  supposing  that  institu- 
tions are  necessarily  good,  or  that  they  must  necessarily  con- 
tinue to  stand  forever,  when  once  made  to  stand.  As  men  form 
bad  habits,  so  communities  set  up  bad  institutions,  and  both  are 
sometimes  slow  to  die.  Fortunately  some  do  die;  and  polyg- 
amy, cannibalism,  the  murder  of  captives,  slavery,  absolute 
despotism,  are  institutions  which  have  mostly  disappeared. 
There  are  other  institutions  which  we  can  spare,  such  as  the 
saloon  and  the  bucket  shop,  the  "machine,"  and  the  spoils 
system  in  politics.  These  are  hard  to  kill  because  they  are 
institutions.  Fortunately,  however,  institutions  are  not  neces- 
sarily immortal. 

We  do  not  then  make  the  blunder  of  assuming  that  institu- 
tions are  to  be  preserved,  simply  because  they  are  institutions. 
We  grant  that  all  institutions  are  to  be  judged  of,  and  approved 
or  condemned  according  to  their  fruits.  The  socialists  bring  the 
institution  of  property  to  bar  and  demand  judgment.  That  is 
their  privilege,  but  let  them  remember  what  it  is  they  attack; 
an  ancient  and  venerable  institution,  established  before  the 
dawn  of  history,  spreading  into  all  known  lands  and  regions, 
adapting  itself  to  every  form  and  stage  of  society,  and  through 
all  recorded  time,  keeping  step  with  the  advance  of  civilization. 
An  institution  thus  ancient,  universal,  and  adaptable,  we  might 
presume  to  be  just  and  useful.  But  the  socialists  retort,  war, 
slavery,  priestcraft  are  also  ancient  and  universal.  Presump- 
tions do  not  coimt.  Agreed.  Let  us  waive  presumptions  and 
go  to  the  merits  of  the  question,  insisting  at  present  on  this 
only:  that  property  as  a  fact,  is  an  institution,  ancient,  universal, 
perennial.  Whether  we  like  it  or  not,  at  some  time  we  shall 
be  forced  to  the  question,  is  there  any  rationale  of  property? 
Is  that  institution  in  its  nature  good  or  bad? 

There  will  be  no  better  time  for  us  than  this  present  hour. 
The  institution  of  property  is  attacked  in  many  quarters,  but  its 
friends  and  enemies  are  still  on  "praying  grounds  and  interceding 


76  WILLIAM  WATTS  FOLWELL 

terms."  The  day  may  possibly  come  when  argtmients  will 
be  drowned  in  the  tumult  of  civil  strife.  The  question  is  not 
an  easy  one,  and  there  is  much  to  discourage  one  who  attacks 
it.  The  philosophers  from  Aristotle  to  Herbert  Spencer  have 
touched  it,  but  with  little  vigor  and  imsatisfactory  results;  all 
there  is  to  show  is  a  half-dozen  theories  of  property.  Let  me 
very  briefly  name  and  characterize  these  theories. 

1.  The  labor  theory:  That  men  make  things  their  own  by 
putting  work  into  them.  This  puts  the  cart  before  the  horse. 
Men  take  possession  of  fruits,  wood,  metals,  land,  before  putting 
work  into  them.     They  own,  before  they  work. 

2.  The  occupancy  theory:  That  men  own  what  they  find  or 
seize.  But  the  question  is,  On  what  right  are  occupancy  and 
capture  founded?  Here  we  have  merely  a  restatement  of  the 
question. 

3.  The  contract  theory:  That  at  some  early  time  the  mem- 
bers of  *jciety  made  a  contract  or  agreement  establishing  indi- 
vidual property  rights  on  a  basis  of  preexisting  communism. 
As  to  this  there  is  no  record  or  tradition  even,  of  any  such  trans- 
action; and  further,  if  there  ever  was  such  a  compact,  the  gen- 
eration which  made  it  could  not  bind  all  nations  forever  to  abide 
by  it. 

4.  The  positive  law  theory:  That  property  rests  solely  on  the 
authority  of  legislating  bodies.  This  theory  leaves  the  question 
just-  where  it  finds  it.  We  are  still  looking  for  the  reason  why 
legislation  can  rightly  establish  property.  What  ought  the  law- 
giver to  decree,  not  what  has  he  decreed,  is  the  question, 

5.  The  theory  of  economic  necessity  so-called:  That  unless 
men  can  own,  they  will  not  work  nor  save.  A  glance  at  exist- 
ing society  disproves  this  necessity.  Ownership  is  indeed  a 
powerful  stimulus  to  labor,  but  it  is  not  the  cause  of  labor. 
Men  work  to  live,  not  to  own. 

6.  The  natural  right  theory:  That  man  was  made  by  ,the 
Creator  to  appropriate  from  the  storehouse  of  nature,  as  a 
condition  of  life  and  development.  I  think  this  theory  to  be 
true,  but  it  is,  as  I  hope  to  show,  but  half  the  truth. 

A  single  grain  of  wheat  in  many  barrels  of  chaff,  is  all  that 
remains.  At  best  we  have  only  a  half-truth.  I  know  it  is  a 
presumptuous  thing  for  any  man  to  propose  anything  novel  in 
philosophy,  and  I  hasten  to  say  that  in  the  following  briefex- 


ECONOMIC  ADDRESSES  77 

position  I  hope  merely' to  arrange  accepted  doctrines  in  such  a 
way  as  to  support  and  correct  one  another.  Otir  patent  right, 
if  it  shall  be  accorded,  covers  merely  the  combination  of  the 
elements,  heretofore  left  in  fruitless  isolation. 

Here  are  we,  a  company  of  serious-minded  people,  sitting 
down  together  to  reason  about  one  of  the  greatest  interests  of 
mankind.  This  very  fact,  this  mutual  invitation,  involves,  pos- 
tulates, logicians  would  say,  another  fact,  which  we,  at  least, 
can  not  question.  In  saying  to  one  another,  "Come  let  us 
reason  together,"  we  concede,  each  to  all  the  others,  the  right 
to  be,  or  if  you  like  the  statement  better,  each  of  us  relinquishes 
all  claim  to  deny  the  right  of  any  other  to  live,  as  long  at  least, 
as  the  debate  may  continue.  Any  proposition  to  discuss  prop- 
erty postulates,  concedes  the  right  of  the  parties  to  remain  in 
existence.  Otherwise  there  would  be  no  occasion  for  interchange 
of  views.  You  must  grant  that  the  man  you  are  arguing  with 
has  the  right  to  live  and  to  continue  living.  Here  we  have  a  bit 
of  solid  ground  under  our  feet,  the  indisputable  right  of  men 
generally,  of  reasoning  men,  to  live.  This  concession  carries  a 
great  deal  with  it.  It  means  a  right  to  standing  room  on  the 
earth,  the  right  to  reach  out  and  seize  for  the  support  of  the 
human  body  some  amount  of  various  solid,  liqmd,  and  gaseous 
substances.  Man  to  live  must  have  air,  drink,  and  food.  These 
do  not  commonly  all  exist  in  one  place.  Hence  there  must  be  a 
right  of  locomotion,  for  a  man  to  go  where  these  substances  or 
some  of  them  can  be  obtained.  In  the  planetary  economy  but 
few  kinds  of  food  are  furnished  by  nature  in  a  form  fit  for  use. 
They  must  be  cultivated,  gathered,  threshed,  shelled,  skinned, 
refined,  cooked,  and  served.  From  the  fleeces  of  animals,  the 
bolls  of  the  cotton  plant,  from  the  stalks  of  the  flax,  and  from 
many  other  sources,  must  be  gathered  the  ultimate  fibres  which 
when  spun  and  woven  and  fashioned  into  garments  clothe  our 
bodies.  The  materials  for  our  housing  must  be  extracted  from 
the  rocks,  from  beds  of  ore  and  clay,  and  from  the  forest.  They 
must  be  assembled,  and  transformed  in  many  ways  by  art  and 
man's  device.  Hence  the  right  to  exert  the  physical  powers  and 
members  in  all  such  processes  can  not  be  denied.  This  means 
the  right  to  labor,  and  the  right  to  labor  follows  (not  precedes) 
the  right  to  appropriate. 


78  WILLIAM  WATTS  FOLWELL 

A  late  French  philanthropist,  M.  Godin,  has  said,  "In  hu- 
manity the  coefficient  of  life  is  labor.  Life  and  labor  are  the 
supreme  law  for  man,  for  life  and  labor  are  one.  Man  has  life 
wherein  to  labor;  and  to  labor  is  to  accomplish  the  law  of  life."* 
This  enthusiastic  statement  though  exaggerated  it  may  be  in 
expression,  is,  I  believe,  essentially  true.  The  human  powers 
and  faculties  are  meant  for  use;  and  man  has  the  right  to  exer- 
cise them,  a  mere  empty  right  vmless  preceded  by  the  right  to 
appropriate.  Further,  in  consequence  of  the  fact  that  our 
earth  whirls  daily  on  an  axis  aslant  to  that  of  the  sun,  while 
circling  yearly  around  that  central  luminar>%  we  have  the 
alternation  of  day  and  night,  the  succession  of  the  seasons,  and 
the  establishment  of  great  climatic  zones.  Clothing  and  shelter 
are  accordingly  "generally  necessary"  to  himian  life.  The  vicis- 
situdes of  wind  and  weather  impel  men  to  lay  by  in  store,  and 
we  call  the  goods  so  appropriated  and  housed  up  "provisions" — 
things  flffeseen.  It  is  necessary  in  almost  any  zone  to  lay  by 
in  store  for  nights  and  winters,  and  even  for  periods  of  stormy 
weather.  Some  of  the  brutes  do  this,  and  it  is  interesting  to 
observe  here,  that  the  institution  of  property  finds  its  proto- 
type, if  not  its  very  beginnings,  in  the  provident  economy  of 
the  ant  and  the  bee,  the  squirrel,  and  even  the  lowly  angle- 
worm. If  men  then,  are  to  Hve,  and  we  who  have  agreed  to 
reason  together,  can  not  deny  that,  if  men  are  to  Hve,  they  are 
to  take  and  to  keep.  "Property"  to  use  a  law^'^er's  phrase, 
property'  "nms  with"  life.  Into  the  mouth  of  Shylock  in  the 
Merchant  of  Venice,  our  great  dramatist  puts  these  words: 
"You  take  my  house  when  you  do  take  the  prop 
That  doth  sustain  my  house;  you  take  my  life 
When  you  do  take  the  means  whereby  I  five."* 
Here  the  philosophers  of  the  nat\u-al  right  school  stop,  content 
to  rest  the  right  of  property  on  the  right  of  the  individual  to 
appropriate. 

If  correctly  reported,  Cardinal  Manning  in  his  last  years, 
gave  his  adherence  to  this  theory,  but  I  am  loth  to  believe  that 
he  would  have  conceded  to  any  individual  the  right  to  appro- 
priate, tmder  all  circtimstances,  according  to  his  own  judgment 
of  his  necessities.  This  would  be  anarchy  pure  and  simple. 
Let  us  be  careful  not  to  stop  at  a  half-way  house  and  content 
ourselves  with  a  half  truth.     Let  us  go  back  to  our  starting 


ECONOMIC  ADDRESSES  79 

point,  a  company  of  serious  men  reasoning  together:  and  we 
may  observe  that  the  existence  of  the  individual  man  is  im- 
possible except  as  a  member  of  society.  The  human  species 
exists  in  families,  tribes,  clans,  states.  The  individual  man 
does  not  exist  by  himself.  In  our  little  society  of  philosophers 
each  member  conceded  to  all  others  the  right  to  live  and  inci- 
dentally to  take  and  keep  physical  substances  and  to  do  all 
acts  and  functions  necessary  to  life.  There  are  as  many  rights 
as  there  are  persons,  and  these  rights  are  qualitatively  equal. 
No  one  partner  may  arrogate  so  much  subsistence  as  may 
endanger  the  life  of  his  fellows.  The  commimity  now  appears 
asserting  its  common  right  to  control  appropriation.  This  right, 
the  individual  must  and  does  concede.  The  extreme  operation 
of  this  principle  may  be  observed  in  beleaguered  fortresses,  storm- 
stayed  ships,  companies  of  emigrants,  ancient  and  recent.  For 
an  individual  in  such  circumstances  to  draw  more  than  his 
allowance  from  the  common  store  is  a  crime  for  which  but  one 
penalty  is  appropriate,  because  it  is  a  kind  of  murder.  In  the 
execution  by  Lieutenant  Greely^  of  a  member  of  his  crew  for 
taking  a  few  oimces  of  shoe  leather  from  the  store  of  food,  we 
have  an  extreme  example  of  the  awful  but  probably  just  appli- 
cation of  our  principle.''  This  right  of  society  to  control  indi- 
vidual appropriation,  this  is  the  nucleus  of  socialism  in  its  good 
sense. 

Here  we  have  two  undeniable  and  apparently  irreconcilable 
truths,  standing  over  against  each  other  like  fate  and  free  will: 
The  right  of  the  individual  to  appropriate;  the  right  of  society 
to  control  appropriation.  Like  predestination  and  free  moral 
agency,  these  two  principles  do  stand  opposed,  eternally  irrec- 
oncilable it  may  be  in  the  forum  of  metaphysics,  but  as  we 
hope  to  show,  forever  coalescing  and  resolving  one  another  in 
the  world  of  life.  "I  take  and  keep,"  says  the  individual  man, 
"because  I  need  to  live."  "You  may  take  and  keep  such  things 
and  so  much  only,"  says  the  community,  because  we  all  need  to 
live.  "My  house  is  my  castle,  let  no  man  enter  without  my 
leave,"  says  the  citizen.  "The  fire  is  sweeping  this  way,  we 
must  level  this  house,"  says  the  fire-marshal  of  San  Francisco; 
and  a  charge  of  dynamite  lays  the  mansion  with  its  fumitvire 
and  plate,  its  gallery  of  paintings  and  statuary  and  all  the  bric- 
^-brac  of  two  continents,  in  a  common  ruin.     "This  land  is 


80  WILLIAM  WATTS  FOLWELL 

mine,"  says  a  farmer,  "and  has  been  tilled  by  my  fathers  for 
generations."  "True,"  say  the  town  oflBcers,  "but  a  school 
house  is  needed,  and  yours  is  the  best  comer  for  the  site.  We 
must  take  your  land,  whether  you  like  it  or  not.  The  town  will 
pay  you  a  fair  compensation,  for  your  improvements  and  inter- 
est, though  it  may  not  allow  anything  for  wounded  feelings  and 
damaged  associations."  Thus  these  two  principles,  individual 
right  and  society-  right  ever  at  war,  like  plus  and  minus  terms 
in  algebra,  combine  in  a  result  of  some  actual  value.  And, 
these  two  principles  are  equally  necessary;  annul  either,  and 
society  dissolves,  and  men  revert  to  the  condition  of  brutes  or 
something  worse.  "It  is  the  right  of  property,"  says  Bentham, 
"which  has  overcome  the  natural  aversion  of  man  to  labor, 
which  has  bestowed  on  men  the  empire  of  the  earth,  which  has 
led  nations  to  give  up  their  wandering  habits,  which  has  created 
a  love  of  country  and  of  posterity."* 

But  \o  this  should  be  added,  "It  is  the  right  of  society  to 
control  f)roperty,  which  has  kept  the  few  from  engrossing  the 
natiiral  gifts  of  this  earth,  and  from  enslaving  their  fellow  men." 
Slavery  was  but  a  phase  of  the  property  question. 

These  two  principles,  individual  claim,  and  social  rule,  are 
eternally  wedded.  Alone,  either  could  wreck  society.  And 
whoever,  be  he  cardinal  or  anti-property  apostle,  undertakes  to 
establish  an^'thing  on  either  principle  alone,  will  find  his  struc- 
ture tumbling  about  his  ears.  Like  man  himself,  property  by 
which  he  lives,  stands  on  two  feet. 

Now  let  me  ask  you  to  recur  to  my  rather  tedious  discussion 
near  the  opening  of  this  paper,  upon  property  as  an  institution. 
I  had  a  definite  purpose  in  that  exposition.  I  wished  to  be 
understood  when  I  should  come  to  the  point  where  we  now  are, 
when  I  should  come  to  say  as  I  now  do,  that  the  institution  of 
property  has  been  developed  or  evolved  by  men  in  the  long 
course  of  ages  as  they  have  been  moved  and  guided  by  both 
these  principles,  individual  right  and  social  right. 

It  is  important  to  obser\"e  that  the  operation  of  these  prin- 
ciples is,  however,  diverse.  The  principle  of  individual  appro- 
priation is  always  at  work  silently  but  indefatigably.  Each 
man  is  always  getting,  on  the  plan  of  Eggleston's  old  woman 
in  the  Hoosier  Schoolmaster,  "when  you're  a-gittin',  git  a  plenty." 
But  social  r^ulation  works  spasmodically  and  intermittently. 


ECONOMIC  ADDRESSES  81 

While  society,  like  the  lion  in  the  fable,  slumbers,  the  tireless 
hiinters  weave  a  network  of  toils  around  her.  At  length  she 
awakes  with  a  roar  and  tremendous  gymnastics  to  bvirst  the 
rope  yams  which  were  meant  to  enslave  her.  Such  outbreaks 
are  always  alarming.  Timid  property  owners  see  vested  rights 
threatened  and  the  state  itself  in  danger.  Sometimes  there 
ought  to  be  alarm.  Vested  rights  in  hoarded  magazines  of 
food,  in  human  flesh  and  bones  ought  to  be  in  danger.  Is  it 
not  now  easy  to  see  that  there  is  another  socialism  than  that 
we  began  with,  a  better  socialism  which  consists  in  the  exercise 
at  suitable  emergencies,  by  proper  agents,  under  proper  forms 
and  safeguards,  of  the  immemorial  right  of  society  to  control 
the  institution  of  property?  In  a  good  sense,  we  are  all  "social- 
ists."    Any  society  is  necessarily  "socialistic." 

This  exercise  of  the  right  of  the  community  is  far  more 
frequent  and  extensive  than  we  commonly  think.  What,  let 
me  ask,  is  the  whole  body  of  our  property  law,  but  the  defini- 
tion and  exercise  of  this  right?  Let  us  illustrate  by  reference 
to  some  of  the  laws  relating  to  real  estate. 

The  Constitution  of  Minnesota  declares  the  dominion  of  the 
landowner  to  be  absolute,  and  not  that  of  a  feudal  tenant.^  But 
ownership  in  land  is  nothing  without  title.  The  owner  must  be 
prepared  to  exhibit  his  chain  of  conveyances  or  the  public  record 
thereof,  as  prescribed  by  law.  If  an  owner  wishes  to  transfer 
his  land  by  sale  or  gift,  the  law  requires  him  to  make  and  de- 
liver a  deed  in  proper  form.  If  an  owner  die  without  disposing 
of  his  lands,  the  law  prescribes  to  whom  they  shall  descend. 
If  he  please  to  make  a  will,  he  must  conform  to  the  technical 
requirements  of  the  law  as  to  signature,  witnesses,  and  per- 
petuities. The  illustrations  of  the  social  regulation  of  prop- 
erty in  the  domain  of  personality  are  so  numerous  one  hardly 
knows  how  to  choose.  In  general  we  enjoy  under  our  con- 
stitution, wide  liberty  in  the  ownership  of  chattels,  and  the 
owner  has  absolute  dominion.  But  there  are  some  forms,  such 
for  instance  as  dies  for  printing  United  States  notes,  which  no 
private  person  may  possess.  There  are  others,  such  as  gam- 
bling utensils  and  intoxicating  liquors,  which  may  be  freely 
owned,  perhaps,  but  which  can  be  exchanged  and  dealt  in  only 
under  stringent  public  regtilation. 


82  WILLIAM  WATTS  FOLWELL 

We  have  on  our  statute  book  a  law  known  to  lawyers  as  the 
"Statute  of  Frauds,"  which  has  for  its  principal  object  to  deter- 
mine and  prescribe  how  contracts  shall  be  vouched  and  ratified. 
Contracts  to  convey  lands  are  absolutely  void  unless  in  writing. 
Sales  of  chattels  over  $50,  are  also  void  without  writings,  unless 
consummated  by  immediate  delivery  of  goods  or  payment  of 
price  in  whole  or  part. 

These  are  simple  and  familiar  provisions,  but  Chancellor 
Kent  in  his  Commentaries  says  of  this  Statute  of  Frauds,  that 
"it  carries  its  influence  through  the  whole  body  of  our  juris- 
prudence and  is  in  many  respects,  the  most  comprehensive, 
salutary,  and  important  legislation  on  record."  At  every  turn 
the  law  governs  transactions  in  personal  property.  Whether 
you  wish  t,o  lend  or  to  borrow;  to  appoint  an  agent  or  act  as 
one;  to  enter  into  a  partnership;  to  buy  or  sell;  to  insure  your 
'house  or  Hfe;  to  ship  goods  by  rail  or  water;  to  draw  a  promis- 
sory note  or  a  bill  of  exchange;  or  do  almost  any  act  or  thing 
relating  to*  personal  property,  the  state  as  the  agent  of  society 
steps  in  and  regulates  yotir  action.  If  you  find  lost  personal 
property,  the  law  regards  you  as  a  trustee,  and  holds  you  respon- 
sible as  such. 

Penal  Code  of  Minnesota  recites,  "A  person  who  finds  lost  property 
under  circumstances  which  give  him  knowledge  or  means  of  inquiry  as 
to  the  true  owner,  and  who  appropriates  svtch  property  to  his  own  use, 
or  to  the  use  of  another  person  who  is  not  entitled  thereto,  without 
having  first  made  every  reasonable  effort  to  find  the  owner  and  restore 
the  property  to  him,  is  guilty  of  larceny."^" 

The  law  will  not  allow  you  to  abandon  your  property  and 
run  away  from  it,  if  the  stuff  abandoned  creates  a  nuisance,  or 
causes  public  or  private  damage.  Property  means  responsi- 
bility to  society.  Owners  are  trustees.  When  private  prop- 
erty is  "affected  by  public  interests  it  ceases  to  be  privati 
juris"  said  Lord  Chief  Justice  Hale  two  himdred  years  ago." 

And  the  Roman  law  lays  down  this  definition  "Dominium  est  jus 
utendi  et  abutendi  re  sua,  quaetenus  juris  ratio  palitur."  "Dominion  is 
the  right  of  using  or  abusing  one's  own,  so  far  as  the  reason  of  the  right 
extends,"  and  society  decides  upon  that  question. 

Property,  it  is  hardly  going  too  far  to  say,  is  a  trust,  and 
society  is  its  guardian. 

Shall  we  not  now  agree  that  the  social  regulation  of  property 


ECONOMIC  ADDRESSES  83 

is  as  real,  as  necessary,  and  as  much  to  be  desired  as  the  equally 
real  and  necessary  right  of  the  individual  to  acquire  property? 
Shall  we  not  stand  by  the  institution  of  property,  as  the  out- 
come of  the  interplay  of  contending  individualistic  and  social- 
istic forces  through  many  ages?  As  in  the  past,  so  in  the  fu- 
ture, this  institution  will  be  molded  and  adjusted  to  suit  chang- 
ing historic  conditions.  When  in  the  past  the  state  has  unduly 
extended  her  control  over  property,  a  democratic  revolution  has 
restored  the  equilibrium.  When  individual  activity  has  pressed 
too  far,  the  law  has  been  invoked  to  repress  it. 

We  are  at  this  moment  in  the  very  article  of  one  of  these 
epochs  of  adjustment.  The  last  century  has  been  one  in  which 
individualism  has  had  a  scope,  perhaps  imequalled  in  all  pre- 
vious history.  The  steam  engine,  the  power  loom,  the  spinning 
mule,  the  steamboat,  the  railway,  the  telegraph,  the  magneto- 
electric  machine,  and  many  minor  inventions  have  given  man 
a  mastery  over  space,  time,  and  the  elements,  beyond  the  dreams 
of  Paracelsus  or  any  reader  of  the  stars.  To  apply  these  tre- 
mendous agencies  on  a  great  scale,  modem  governments  have 
created  artificial  persons,  called  corporations,  and  conceded  to 
them  powers  and  franchises  of  untold  value.  Dtiring  the  last 
century,  society  has  been  calling  out  to  men,  "Go  out  into  all 
lands,  dig  and  delve,  buy  and  sell,  invent  machines,  gather  gold 
and  silver,  seize  on  provinces.  All,  all  you  can  find  or  get  shall 
be  yours  and  your  children's  forever."  All  this  is  a  petulant 
reaction  from  the  policy  of  the  preceding  centuries  to  limit  and 
repress  individual  action  and  enterprise.  We  have  just  awakened 
to  find  ourselves  in  the  toils  woven  roimd  society  during  a  long 
and  unsuspecting  sleep.  We  awake  to  see  corporations  stronger 
and  richer  than  states  and  cities,  buying  up  legislatiires  and  city 
councils  as  we  hire  men  to  grub  and  shovel;  great  fortunes  won 
by  merely  setting  traps  and  weirs  in  the  stream  of  social  indus- 
try, to  catch  the  earnings  of  other  men.  We  have  syndicates 
and  trusts  engrossing  great  lines  of  industry  and  commerce,  and 
imposing  arbitrary  prices  on  consumers,  destroying,  without  pity, 
any  who  attempt  competition.  We  have  stock  and  produce 
exchanges  for  gambling  in  securities  and  products,  conforming 
so  exactly  to  the  customs  of  legitimate  trade  that  courts  and 
legislatures  can  not  come  upon  them.  Artisan  laborers  have 
become  a  proletariat,  as  the  French  express  it,  to  be  exploited 


84  WILLIAM  WATTS  FOLWELL 

by  a  small  body  of  employers  who  control  the  means  of  pro- 
duction. The  self -employing  master  workman  who  has  worked 
his  way  up  to  a  situation  of  economic  and  social  independence 
is  a  rare  spectacle,  and  the  arts  of  his  class  have  been  lost  in 
the  drudgery  of  machine-tending.  The  idea  of  steady  accumu- 
lation by  industry  has  almost  faded  out  of  modem  life.  For- 
tunes in  our  day  are  to  be  won  by  tricks  of  trade,  by  cornering 
of  markets,  by  seizure  of  natural  deposits,  by  real  estate  gam- 
bling, and  by  the  promotion  of  salted  mining  schemes. 

It  is  high  time  for  socialism  in  the  good  sense  of  the  word  to 
assert  itself.  It  is  high  time  for  society  to  put  a  check  on  stock 
and  produce  gambling,  on  mining  monopoly,  on  timber  thiev- 
ing, on  land  grabbing,  on  trusts  and  "combines"  of  every  sort, 
and  to  commend  to  the  lips  of  the  purse-proud  millionaire  that 
cup  of  damnation,  poured  out  by  him  for  the  public.  It  is  high 
time  for  society  to  assert  her  claim  to  some  just  proportion  of 
the  wealtn  acquired  by  the  use  of  her  lands,  mines,  forests,  water 
powers,  fisheries  and  rights  of  way  which  she  has  blindly  allowed 
individuals  and  corporations  to  engross  and  monopolize. 

True  socialism,  then,  admits  these  evils,  and  demands  the 
readjustment  of  the  institution  of  property  to  the  circumstances 
of  the  age.  To  effect  this  readjustment  it  plants  itself  on  the 
immemorial  right  of  society  to  control  that  institution.  On  this 
everlasting  foundation  it  will  rebuild  the  old  fabric  to  suit  the 
wants  of  modem  men. 

Already  has  the  work  of  exploration  and  clearing  begun. 
The  Inter-State  Commerce  Commission,  our  State  Railroad  and 
"Warehouse  Commission,  our  Bureaus  of  Labor  and  Statistics  are 
collecting  data  according  to  which  plans  for  rebuilding  may  at 
length  be  drawn. 

An  epoch  in  the  history  of  America  was  opened  when  the  Conservation 
Congress  of  governors  of  states  and  others,  assembled  in  the  East  room 
of  the  White  House  at  Washington,  D.  C,  May  13,  1908,  pursuant  to 
a  call  by  President  Roosevelt.  The  President  opened  the  conference 
with  an  address,  suflScient  in  itself  to  place  him  in  the  highest  rank  of 
patriots  and  statesmen.  The  discussions,  which  lasted  three  days, 
covered  the  judicious  use  and  preservation  of  our  mineral,  water,  forest, 
and  arable  resources.  Incidentally  the  need  of  government  control, 
and  limitation  of  unrestrained  and  unregtdated  private  activity  was 
brought  into  view.  A  large  volume  of  proceedings  and  papers  was 
published.     An  admirable  r6sum6  of  the  subject  may  be  found  in  the 


ECONOMIC  ADDRESSES  85 

book  of  Dr.  Charles  Richard  Van  Hise,  president  of  the  University  of 
Wisconsin,  entitled,  The  Conservation  of  Natural  Resources  in  the  United 
States.     CNew  York,  1910) 

But  the  false  socialist — false  in  the  sense  of  mistaken — (many 
of  them  are  the  most  amiable  of  men)  the  absurd,  the  imprac- 
ticable, the  lop-sided  socialists,  are  those  who,  supposing  the 
wealth  of  the  world  to  be  much  greater  than  it  is,  believe  that 
everybody  would  be  rich  and  happy  if  it  were  only  evenly  dis- 
tributed ;  who  seeing  the  fool  rich,  swelling  and  parading  in  grand 
array,  and  the  poor,  as  they  think,  sinking  into  hopeless  indus- 
trial slavery,  lose  their  heads,  and  conclude  that  property  itself, 
and  not  the  abuse  of  property,  is  the  cause  of  these  evils.  "The 
ship  is  unseaworthy,"  they  cry,  "let  us  jump  overboard."  And 
it's  afloat  they  are,  on  stormy  waters.  The  one  point,  the 
radical  point,  on  which  the  wild  socialists  agree  is  the  denial 
in  whole  or  in  part  of  the  right  of  private  property,  and  the 
committal  of  all  capital  to  the  custody  of  society. 

The  state  socialists,  our  best  example,  demand  the  abolition 
of  private  ownership  of  land,  raw  materials,  and  machines. 
They  would  leave  nothing  to  be  owned  by  individuals,  but  such 
shares  of  subsistence  as  might  finally  be  apportioned  to  them 
by  the  distributing  officers  of  the  industrial  state. 

With  this  ultimate  aim  in  view,  moderate  state  socialists 
(some  of  them  please  to  call  themselves  Fabian  socialists)  come 
forward  with  proposals  for  approximate  reforms,  which  may 
reasonably  challenge  attention.  They  point  to  the  post  office, 
and  say  "Let  the  state  also  own  and  manage  the  telegraphs 
and  the  railways."  They  point  to  the  city  water  and  gas  supply 
and  propose  that  the  city  likewise  furnish  fuel  and  ice  and  free 
street  cars.  They  observe  the  supply  of  school  books  at  public 
expense,  and  suggest  that  the  children  also  have  dinners  and 
jackets. 

Low-priced  luncheons  are  now  served  to  school  children  in  many 
American  cities. 

They  find  the  public  school  system  itself  a  thoroughly  social- 
istic establishment.  "Very  good,"  they  say  "let  us  have  also 
free  public  hospitals  where  all  the  sick  may  be  treated,  and  free 
graves  and  funeral  rides  for  all."  They  find  that  in  many  foreign 
countries  mines  and  forests  are  owned  and  worked  by  the  gov- 
ernment.    It  is  time,  they  say,  to  confiscate  to  the  public  use 


86  WILLIAM  WATTS  FOLWELL 

the  deposits  and  wood  lands  to  which  individuals  have  been 
allowed  to  set  up  a  false  and  utterly  unjust  title.  They  see  the 
government  operating  a  vast  and  complicated  military  and 
naval  apparatus.  By  means  of  appropriate  bureaus  and  de- 
partments the  government  can,  they  claim,  likewise  take  charge 
of  all  the  manufactures  of  iron  and  steel,  wool,  cotton,  and  silk. 
And  I.  suppose  this  proposition  is  far  from  being  impracticable. 
But  all  these  things  the  extreme  state  socialists  propose  on 
the  ground  that  it  is  wrong  per  se  for  individuals  to  own  any 
means  of  production.  With  some  of  these  particular  proposi- 
tions, a  good  citizen  may  agree.  He  may  admit  that  the  gov- 
ernment might  wisely  and  profitably  take  charge  of  the  tele- 
graph and  at  length  gradually  of  the  railway,  that  a  national 
forestry  system  should  be  established,  which  would  actually  or 
virtually  annul  private  ownership  over  wide  forest  areas,  that 
all  the  mines  and  deposits  in  the  country  should  be  made  the 
property^  of  the  state  and  worked  under  public  oversight  or 
management.  All  these  and  more  he  might  advocate  but  not, 
not  for  the  reasons  of  the  state  socialists,  that  property  is  rob- 
bery, and  ownership  a  sin,  but  on  the  solid  ground  of  public 
right  to  control  private  property  for  public  good. 

Postmaster-General  Hitchcock  in  his  annual  report  for  1911  has 
proposed  the  acquisition  and  subsequent  operation  of  all  the  telegraph 
and  telephone  lines  in  the  country;  and  the  proposition  is  received  by 
the  public  without  alarm  and  in  some  quarters  it  is  heartily  welcomed. 
There  is  the  same  argument  for  government  ownership  operation  of  these 
agencies  of  communication  as  for  those  of  the  postal  establishment. 

The  state  is  already  armed  with  all  the  constitutional  au- 
thority necessary  to  such  reforms  in  the  control  of  property  as 
wise  and  reasonable  men  may  desire.  What  is  needed  is  wise 
application  of  old  principles  to  new  circumstances,  not  de- 
structive revolution;  not  to  scuttle  the  old  ship  because  there 
are  mutineers  and  thieves  aboard.  We  are  all  socialists  in  a 
good  sense,  and  can  not  help  being  such,  and  I  wish  that  good 
socialism  may  increase  and  grow  in  us;  the  socialism  of  the 
golden  rule  and  the  common  law.  We  may  all  accept,  espe- 
cially those  of  us  who  profess  and  call  ourselves  Christians, 
may  gladly  adopt,  the  motto  of  the  Knights  of  Labor,  "An 
injury  to  one  is  the  concern  of  all."  More  than  ever  before 
in  history,  are  men  members  one  of  another.  The  minute  divi- 
sion of  labor  has  made  class  more  dependent  on  class  than  ever. 


ECONOMIC  ADDRESSES  87 

All  great  industry  has  become  essentially  cooperative.  Em- 
ployers and  employees  are  partners,  willing  or  unwilling,  in 
every  business. 

Being  then  socialists,  because  we  are  human,  let  us  recognize 
and  practice  the  good  there  is  in  socialism.  Let  us  stand  for 
our  social  right  to  control  the  institution  of  property  for  the 
good  of  each  and  all.  But  while  doing  this  we  are  not  to  forget 
nor  ignore  the  equally  ftmdamental  right  of  each  one  of  us  as 
individuals  to  draw  from  the  storehouse  of  nature  and  to  take 
and  to  keep  what  is  necessary  to  life  and  its  purposes. 

But  we  must  not  forget  that  the  social  right  is  subordinate 
and  ancillary  to  the  individual  right,  because  society  having 
served  its  purpose  of  forming  the  environment  in  which  the 
individual  may  exist  and  develop,  will  at  length  disappear.  A 
great  philosopher  has  said,  "Human  societies  are  bom,  live,  and 
die  upon  the  earth,  there  they  accomplish  their  destiny.  But 
they  contain  not  the  whole  man,  .  .  .  We,  individuals,  each 
with  a  separate  and  distinct  existence,  with  an  identical  per- 
son, beings  endowed  with  immortality,  we  have  a  higher  des- 
tiny than  states."^^ 

Society,  and  the  state,  belong  to  this  world,  and  shall  perish 
with  it.  The  man  belongs  to  the  universe,  and  can  not  be 
destroyed.  Whoever  holds  to  any  such  noble  and  true  view  of 
the  human  soul  and  its  destiny,  can  be  in  no  danger  of  putting 
in  jeopardy  that  institution  of  property  which  guarantees  the 
existence  and  development  of  the  individual,  which  offers  a 
field  and  a  motive  for  the  employment  of  the  human  powers, 
which  gives  to  the  individual  the  ability  and  the  means  to  serve 
his  fellowmen.  Property  is  the  mother  of  frugality,  of  indus- 
try, of  independence.  And  these  are  the  basis  of  social  virtue. 
Property  inculcates  respect  for  rights,  for  equal  rights,  and  is 
the  core  of  true  socialism.  Mine  is  mine  because  yours  is  yovirs 
and  all  is  ours.  The  right  of  each  is  the  guaranty  of  all.  This 
is  the  essence  of  true  democracy,  and  the  ultimate  guaranty  of 
liberty.  Men  will  continue  to  mold  and  modify  the  institution 
of  property  but  they  can  never  abolish  it.  It  "runs  with"  life 
itself.  As  in  the  old  time  before  us,  so  to  the  end  of  the  world 
the  decalogue  will  both  teach  and  sanction  its  eternal  justice. 
"Thou  shalt  not  covet  thy  neighbor's  house  .  .  .  nor  anything 
which  is  thy  neighbor's."  Thou  shalt  not  kill;  thou  shalt  not 
steal:  life  and  property  run  together. 


NOTES 

» P.  J.  Proudhon,     Works.     English  translation     1:12.     Princeton,  Mass.     1870. 
«  Cicero,  De  Finibus     bk.  3,  oh.  20. 

*  See  f  or^^ing  address. 

*  Godin.  Social  Solutions    p.  139.     New  York.     1886. 

*  Merchant  of  Venice     act  4,  scene  2. 

•  Afterwards  General  Greely. 

'  Report  of  the  Proceedings  of  the  UniUd  States  Expedition  to  Lady  Franklin  Bay     1 :363. 

•  Jeremy  Bentham.     Works     1:309.     Edinburgh.     1869. 
But  Bentham  draws  from  Beccaria,  the  Italian  philosopher. 

•  Article  1,  sec  15. 

>•  Penal  Code  of  Minnesota,  1885     sec.  425. 
u  See  ante.     Page  41. 

» Guizot,    History  of  CiTtlizaiion   in   Europe     New   York.     1891.     (citing   De   Royer 
Collard). 


THE  NEW  ECONOMICS 


THE  NEW  ECONOMICS 

The  Fifth  Annual  Meeting  of  the  American  Economic  Association 
was  held  at  Chatauqua,  New  York,  August  23  to  26,  1892.  The  president 
for  the  year  was  Professor  Charles  F.  Dunbar  of  Harvard  University. 
Ill-health  and  absence  prevented  him  from  performing  the  duties  which 
devolved  on  the  author,  one  of  the  vice-presidents.  For  the  opening 
address,  here  in  part  reprinted,  he  chose  a  subject  in  which  he  was  at 
the  time  much  interested. *  Readers  will  observe  that  although  in  the 
.course  of  the  quarter-century  which  has  elapsed  his  expectations  have 
been  in  some  degree  realized,  problems  of  first  importance  in  such  lines 
as  taxation,  transportation,  forest  and  mining  policies,  public  finances, 
etc.  await  solution. 

It  is  a  common  remark  that  the  young  man  emerging  from 
college  needs  first  of  all  to  throw  his  books  on  political  economy 
to  the  dogs,  before  he  can  judge  and  act  with  practical  sense 
upon  the  economic  problems  which  at  once  present  themselves 
to  him  as  a  citizen.  "Theory,  mere  theory,  and  idle  specula- 
tion," is  the  popular  estimation  of  our  science,  as  we  fondly 
call  it. 

How  extreme  and  unjust  this  view  is  we  all  know,  but  we 
must,  I  think,  still  admit  that  there  is  some  color  for  it.  If 
political  economists  are  brushed  aside  as  visionary  and  un- 
practical speculators,  there  must  be  a  show  of  reason  or  excuse 
for  it.  Such  excuse  is  not  far  to  seek,  for  men  of  three  score, 
who.  in  the  mid-century  days,  were  studying  the  political  econ- 
omy taught  in  American  schools  as  a  branch  of,  or  attachment 
to,  the  department  of  philosophy.  We  stood  up  in  otu:  places 
and  recited  the  text  to  respectable  ecclesiastical  professors,  who 
"held  the  book  and  looked  after."  The  system  made  a  fair 
show  in  the  flesh.  Its  doctrines  were  marshaled  in  imposing 
hierarchical  fashion,  and  followed  on  in  a  sequence  of  parts, 
books,  chapters,  sections,  and  paragraphs.  For  examination 
purposes  the  subject  was  almost  as  convenient  as  geometry,  or 
the  syntax  of  the  Greek  moods.  The  most  deep  and  general 
impression  left  on  the  mind  of  those  students  was  that  there 
were  certain  "laws  of  trade,"  analogous  to  the  laws  of  physics, 
which  governed  things  economic  with  invariable  and  omnipotent 
sway.  These  laws,  if  they  were  embodied  and  could  speak, 
might  say  of  themselves:  "Men  may  come,  and  men  may  go; 
but  we  go  on  forever." 


92  WILLIAM  WATTS  FOLWELL 

I  am  far  from  believing  or  saying  that  there  was  not  a 
central  core  of  truth  in  that  teaching — but  the  mischief  lay  in 
the  tacit  assumption  that  these  "laws  of  trade"  operated  on 
men  like  the  laws  of  gravity,  from  without.  The  economic 
atom  was  afloat  in  the  stream,  and  could  move  only  in  the 
direction  of  the  current.  It  was  an  obvious  corollary  that  the 
results  of  these  "laws"  might  easily  be  foreseen  and  foretold. 
Above  all,  it  was  left  to  be  imderstood,  when  not  dogmatically 
inculcated,  that  the  economic  atoms  must  be  careful  not  to 
rebel  against  the  omnipotence  of  the  laws  of  trade.  No  molec- 
ular combinations  or  arrangements  could  be  of  any  use. 
Laissez  J  aire,  laissez  oiler,  the  protest  of  the  French  merchants 
against  excessive  government  steering,  became  the  last  word  in 
an  economic  philosophy,  or  rather  the  negation  of  a  philosophy. 

Laissez  J  aire  had  gone  to  seed,  and  its  frtiit  was  ashes.  The 
political  economy  which  began  with  Adam  Smith  to  consider  of 
the  "weijth  of  nations"  had  degenerated  into  speculations  upon 
the  probable  conduct  of  hypothetical  economic  atoms,  under  the 
operation  of  forces  beyond  their  control. 

"The  war  notifies  us  that  laissez  faire  is  dead.  The  nation  that 
kUled  it  now  threatens  to  build  world  empire  on  the  others  that  did  not 
know  it."- 

I  do  not  need  to  inform  this  audience  that  upon  this  dark- 
ness a  day  star  has  already  risen,  and  that  a  new  political 
economy  has  been  born,  of  which  we  may  cherish  moderate,  but 
well-grounded  hopes. 

The  new  political  economy  is  not  a  branch  of  moral  philoso- 
phy; it  is  a  branch  and  constituent  of  sociology — the  science  of 
the  social  man.  The  location  of  political  economy  in  the 
province  of  sociology  involves  consequences  of  the  greatest 
moment. 

At  the  first  glance  the  object  of  economic  investigation  is 
seen  to  be  the  actual  behavior  of  himian  society  as  it  passes 
before  us,  posted  at  the  economic  standpoint,  in  historical 
review;  not  the  possible  behavior  of  abstract  economic  atoms 
acting  under  supposed  conditions,  which  may  never  have  existed. 

There  is  no  longer  any  concern  about  "the  economic  man," 
there  being  no  economic  man  separated  from  the  living  human 
creature  as  he  stands  in  actual  relations  to  the  social  and  political 
groups  in  which  he  exists  and  to  the  natural  world  about  him. 


ECONOMIC  ADDRESSES  93 

The  springs  and  motions  of  economic  activity  lie,  then,  in 
the  whole  complex  life  of  a  people.  Subject  to  the  conditions 
of  nature,  men  do  and  get  what  they  desire  to  do  and  get. 
The  primary  question  in  economics  is.  What  are  the  needs, 
wants,  and  desires  of  a  people?  In  the  new  economy  that  has 
begun  to  be,  the  topic  of  consumption,  by  Mill  entirely  shut 
out  of  the  science,  and  by  most  unduly  subordinated,  will  have 
the  leading  chapters. 

"Consumption,"  said  Jevons,  prophetically,  "is  the  dynamics 
of  political  economy."  To  write  political  economy  without 
founding  it  on  a  discussion  of  the  needs,  wants,  and  desires  of 
men,  is  like  "making  watches  without  mainsprings,"  to  borrow 
a  figure  which  Lowell  applied  to  socialism. 

The  assignment  of  economics  to  the  domain  of  social  science 
has  a  decisive  effect  on  the  choice  of  method. 

It  will  be  admitted  here  that  the  deductive  method  was 
overworked  by  those  early  economists  who  regarded  and  taught 
their  science  as  a  branch  of  moral  philosophy,  and  it  is  no 
slander  to  say  that  most  of  their  successors  have  followed  their 
example.  The  political  economy  which  undertakes  to  account 
for  any  part  of  the  activities  of  human  society  can  not  begin 
with  postulates  nor  continue  by  deduction.  It  must  begin  with 
observation  and  record.  Hypothesis  must  succeed  hypothesis 
imtil  generalizations  are  reached  which,  satisfy  the  under- 
standing.' 

The  social  sciences  can  flourish  and  develop  only  on  a  soil 
prepared  by  the  statistician.  Sir  William  Petty  and  Arthur 
Young  understood  and  appreciated  the  importance  of  "political 
arithmetic"  as  clearly  as  any  of  their  successors,  but  only 
meagre  collections  were  possible  in  their  times.  So  long  as 
observations  were  of  men  and  things  in  the  lump  and  on  the 
wing,  generalizations  were,  and  had  to  be,  casual  and  uncertain. 

A  modem  free  state  must,  of  course,  and  from  the  first, 
establish  and  put  into  operation  its  revenue,  administrative  and 
police  functions.  The  very  next  thing,  in  my  judgment,  should 
be  the  organization  of  its  statistical  establishment.  The  people 
should  demand  the  opening  of  a  great  people's  intelligence 
office,  to  collect  and  diffuse  the  results  of  their  economic  history' 
as  it  is  made  from  day  to  day,  for  the  advantage  of  all.  There 
ought  to  be  no  delay  on  the  part  of  Congress  in  merging  existing 


94  WILLIAM  WATTS  FOLWELL 

elements  into  a  national  department  of  statistics,  and  placing  at 
the  head  of  it  the  one  man,  whose  name  is  already  on  your  lips, 
and  whose  life  will,  I  trust,  be  spared  to  train  more  than  one 
disciple  fitted  to  carry  on  the  work  which  he  has  pioneered.* 

I  turn  now  to  another  consequence  of  the  assignment  of 
economics  to  the  domain  of  sociology,  which  is  cardinal.  The 
discussion  I  desire  to  offer  will  be  in  some  degree  corrective  of 
statements  already  made,  whose  immediate  effect  I  hesitated  to 
weaken  by  limitation  and  concession. 

In  a  brief  paper  which  was  accorded  a  reading  at  a  previous 
meeting  of  this  Association,  the  suggestion  was  made  that  the 
relations  of  human  society  fall  into  three  natural  subdivisions, 
the  social,  the  industrial,  and  the  jural  or  political.  This  triple 
analysis  seems  to  be  exhaustive,  and  each  category  logically 
exclusive  of  the  other  two.  Still,  it  needs  ever  to  be  borne  in 
mind  that  in  the  world  of  fact  these  relations  blend,  and  interlace, 
and  int^fuse  interminably.^ 

The  economist,  donning  the  philosopher's  magic  spectacles, 
seeks  to  isolate  from  the  maze  the  industrial  relations.  The 
wonderful  glasses  do  enable  him  to  do  this,  but  only  to  show 
them  on  a  background  of  the  other  relations;  and  this  back- 
ground, if  I  may  be  permitted  to  work  the  optical  figure  with 
some  freedom,  is  double,  according  as  the  industrial  group  is 
tinted  on  the  one  hand  by  the  social,  on  the  other  by  the  jural 
or  political.  The  field  of  view  exhibits,  therefore,  two  limbs  or 
hemispheres — the  socio-economic  and  the  politico-economic. 

This  dichotomy  seems  to  me  to  be  fundamental  in  political 
economy. 

The  history  of  economic  doctrine  shows  these  two  hemi- 
spheres to  have  been  recognized,  but  alternatively  or  succes- 
sively, not  as  co-existing  and  uniting  on  a  median  line  to  form  a 
complete  body. 

My  contention  is  for  the  recognition  and  development  of  a 
science  of  public  economy. 

It  is  time  to  suffer  our  eyes,  so  long  color-blinded,  to  behold 
the  politico-economic  hemisphere,  which  has  all  the  while  lain 
before  them,  but  unseen.  It  is  this  one-sided  development  of 
economics  which  has  placed  its  devotees  at  a  disadvantage,  and 
so  often  rendered  them  unwise  for  counsel  and  helpless  for 
action,  in  public  affairs. 


ECONOMIC  ADDRESSES  95 

Since  the  close  of  the  formative  era  of  our  national  life,  say 
with  Monroe's  administration,  all  the  great  national  issues  have 
been  economic.  Such  were  the  tarifT,  the  slavery  question,  at 
bottom,  and  the  various  monetary  questions  that  have  arisen, 
culminating  in  the  "silver  question"  of  to-day. 

Such  issues  multiply  upon  us.  The  platform  of  a  reform 
party  lately  contained  more  than  twenty  planks,  all  but  two  or 
three  economic  planks.  The  issues  of  the  pending  campaign  are 
purely  economic  in  their  nature,  and  it  is  indeed  pitiable  that  our 
science  is  in  such  a  state  and  in  such  repute  that  it  can  con- 
tribute but  slightly  to  the  decision.® 

The  claim  which  the  country  has  upon  her  economists  may 
be  sufficiently  illustrated  by  two  special  and  one  general  con- 
sideration, to  which  I  will  but  briefly  refer.  The  first  is  that  of 
land.  The  public  land  policy  of  the  nation  has  had  for  its 
central  idea  that  of  getting  the  arable  lands  of  the  country  into 
the  possession  of  small  holders,  themselves  the  cultivators.  To 
this  policy  is  due,  without  doubt,  in  great  part,  the  wealth, 
intelligence,  and  happiness  of  our  rural  people.  But  there  is  a 
cloud  hardly  as  big  as  a  man's  hand  now  rising  on  this  peaceful 
horizon — the  beginning  of  a  process  which  tends  to  supplant  the 
traditional  American  small  holding  by  the  bonanza  farm,  owned 
by  a  corporation,  and  worked  by  hirelings.  The  "promoter" 
is  already  showing  his  skillful  hand  in  the  exploitation  of  capital 
and  labor  upon  land.  The  danger  referred  to  is  all  the  more 
threatening  in  view  of  the  revolution  which  electricity  is  likely 
to  work  in  agriculture. 

The  bonanza  farms  then  in  mind,  of  hundreds  or  thousands  of  acres, 
often  including  alternate  sections  of  railroad  lands,  have  turned  out  to 
be  ephemeral,  because  of  the  rapid  exhaustion  of  the  soil  by  continuous 
single  cropping.  But  large  farming  by  means  of  machines  still  looms  as 
a  danger.  It  is  much  to  be  hoped  that  the  cheap  but  effective  tractors 
propelled  by  interior-combustion  engines,  not  thought  of  twenty-five 
years  ago,  may  enable  the  small  farmer  to  survive.  When  our  rural 
population  becomes  more  homogeneous,  and  less  migratory,  cooperation 
may  render  small  farming  the  more  profitable,  and  J.  S.  Rankin's  dreams 
may  come  true. 

Our  public  land  policy  has  made  but  slight  account  of  lands 
not  arable.  The  vast  mineral  deposits  of  the  country — vast 
beyond  imagination — were  simply  left  to  be  the  prey  of  the 
adventurous  and  lucky  prospector.     That  simple  plan  served 


96  WILLIAM  WATTS  FOLWELL 

well  enough  when  it  applied  to  the  inconsiderable  deposits  of 
the  Atlantic  sea-board,  before  stone  coal  had  been  utilized  for 
fuel.  It  is  not  working  so  equitably  in  these  days  when  a  few 
millionaires,  under  protection  of  laws  adapted  to  a  state  which 
knew  not  millionaires,  nor  corporations,  nor  promoters,  are 
permitted  to  seize,  and  without  rendering  any  substantial 
equivalent,  to  engross  the  untold  wealth  stored  up  in  the  prim- 
itive formations  which  environ  Lake  Superior  and  form  the 
mountain  masses  of  the  great  West  of  to-day. 

There  was  a  railway  belonging  to  Wright  and  Davis,  Michigan 
lumber  men  .  .  .  they  owned  somewhere  in  the  neighborhood  of 
25,000  acres,  that  were  particularly  well  situated  on  the  range  .  .  . 
We  bought  the  whole  outfit  [for  $4,050,000]  ...  It  became  my 
property  ....  About  a  year  after  I  turned  them  over  to  the  Lake 
Superior  Company  .  .  .  for  the  benefit  of  the  stockholders  of  the 
Great  Northern  Railway  Company  ...  I  was  paid  back  the  money 
that  I  had  paid  for  these  properties  with  5  per  cent  interest.  All  the 
availabl^ore  on  the  American  continent  that  I  know  of,  .  .  .  is  owned 
by  peopK  ...  I  think  .  .  .  the  explorations  [of  the  Wright  and 
Davis  purchase  with  some  additional  acquisitions]  have  shown  some- 
thing over  400,000,000  tons  .  .  .  There  are  1,300,000,000  according  to 
the  tax  commissioner's  report  ...  I  should  say  300,000,000  were 
held  by  outside  owners;  400,000,000  by  us;  and  [the  remainder  by]  The 
United  States  Steel  Corporation.^ 

The  "laws  of  trade"  are  a  stale  and  exasperating  joke  to  the 
millions  of  people,  using  the  anthracite  coal  of  the  Alleghanies, 
when  they  know  that  the  price  of  such  fuel  is  or  may  be  fixed 
for  them  by  a  clique  of  a  half  dozen  "magnates." 

The  same  kind  of  thing  is  going  on  with  our  remaining 
forest  lands.  Under  the  operation  of  laws  intended  to  protect 
and  foster  actual  settlement  and  the  establishment  of  homes  and 
home  industries,  the  lumbering  corporations  are  acquiring  title 
to  vast  provinces  of  timber  lands,  and  have  already  formed 
the  combinations  which  enable  them  to  dictate  prices  to  con- 
simiers. 

"The  remaining  supply  of  standing  timber  in  continental  United 
States  (excluding  Alaska)  is  now  about  2,800,000,000,000  board  feet  of 
which  2,200,000,000,000  board  feet  is  privately  owned.  .  .  .  Three 
holdings  (The  Southern  Pacific  Company,  The  Weyerhaeuser  Timber 
Company,  and  the  Northern  Pacific  Railway  Company)  include  no  less 
than  1 1  per  cent  of  the  privately  owned  timber  of  the  entire  country .  .  . 
The  eight  largest  holdings  together  own  approximately  15.4  per  cent  of 
the  total  privately  owned  timber  in  the  countrj^  .  .  .  three  hundred 
and  eighty-five  holders  control  55.6  per  cent."* 


ECONOMIC  ADDRESSES  97 

A  further  instance  of  the  operation  of  the  land  policy,  adapted 
to  out-grown  conditions,  is  found  in  the  arid  lands  of  the  great 
West.  These  lands  are  not  infertile;  they  only  need  the  water 
now  running  to  waste  down  the  mountain  ravines  and  canyons 
to  produce  with  an  abundance  and  a  regularity  marvelous  in  the 
eyes  of  the  eastern  farmer,  whose  rainfall  may  fail  him  when 
failure  is  ruin,  or  drown  out  his  crops  with  ill-timed  generosity. 
The  law  of  supply  and  demand  does  not  offer  any  promising 
solution  of  the  problem  of  impotmding  and  distributing  these 
life  and  wealth-giving  waters.  A  statute  of  the  state  of  Mon- 
tana, granting  title  to  the  man  who  first  dams  up  and  leads  away 
for  irrigating  purposes  the  waters  of  a  stream,  has  already  begot- 
ten a  wilderness  of  law  suits,  to  the  great  comfort  of  Montana 
attorneys,  but  also  to  the  sorrow  and  cost  of  Montana  farmers.® 

I  can  barely  mention  here,  as  an  item  of  kindred  interest, 
the  engrossing  of  vast  ranges  of  pasture  lands  in  the  western 
mountain  regions  by  "combines"  of  ranchmen,  who  buy  up 
slight  fringes  of  lands  along  the  water  courses. 

Need  more  be  said  to  show  that  a  new  and  juster  public 
policy  of  land  must  be  devised  and  established  ? 

Next  to  the  land  policy  (and  perhaps  next  above,  rather 
than  next  below)  stands  the  labor  policy  of  the  nation.  Laissez 
faire  was  good  enough  and  simple  enough  forty  years  ago,  when 
"labor"  meant  the  single  hired  man  of  the  small  farmer,  or  the 
little  group  of  journeymen  and  apprentices,  who  wrought  side 
by  side  with  their  master  in  the  little  shop  of  a  small  manu- 
facturer; and  when  "capital"  meant  the  savings  and  pinchings 
of  years  of  toil  and  self-denial. 

The  arrival  of  large  production,  and  the  massing  of  vast 
capitals  by  exploitation,  and  the  enormous  increase  of  the  labor 
force  of  the  country  from  foreign  sources,  has  changed  that 
idyllic  state  of  things. 

In  the  changed  condition  of  our  industrial  state,  the  relation 
of  the  individual  workman  to  the  great  employing  corporation — 
I  venture  to  suggest — is  not  simply  that  of  contract  termin- 
able at  the  caprice  of  either  party.  The  conditions  of  free  con- 
tracting fail;  freedom  of  movement,  wide  and  active  competition 
for  labor  between  employers,  the  possession  of  a  complete  art  or 
trade  by  the  artisan.  This  is  a  hard  proposition  to  demonstrate, 
but  its  substantial  truth  is  felt  deep  in  the  hearts  of  thousands 


98  WILLIAM  WATTS  FOLWELL 

of  toilers — and  earnest  friends  of  "labor,"  viewing  the  disadvan- 
tageous situation  of  the  modern  artisan  in  large  establishments, 
endeavor  to  characterize  it  by  the  striking  but  extravagant  term 
"wage-slavery."  For  protection  and  mutual  aid  labor  long  since 
resorted  to  its  ancient  device  of  combination,  and  the  trades 
union  came  to  stay  as  long  as  large  production  and  large  capitals 
shall  last.  No  one  who  understands  the  history  of  economic 
movements  can  deny  the  great  service  wrought  by  labor  organi- 
zation. But  for  it  "wage-slavery"  would  have  become  a  fact,  as 
it  is  now  only  a  tendency.  Nor  will  it,  on  the  other  hand,  be 
denied  that  this  service  has  been  rendered  at  the  cost  of  enor- 
mous self -caused  sacrifices,  and  suffering  among  the  laboring 
people,  and  great  inconvenience  and  damage  to  general  society. 
Shall  we  not  make  every  effort  which  ingenuity  may  suggest 
to  work  out  a  public  policy  of  industry,  which  shall  establish 
justice  between  the  working  man  and  his  employer,  and  also 
ensure  ^  society  domestic  tranquillity?  In  some  of  our  states, 
laws  have  been  passed  to  regulate  the  party  caucuses,  thus 
bringing  party  politics  under  the  operation  of  the  law.^"  On  the 
same  principle  may  not  the  law  interpose  to  regulate  trades 
unions  and  to  restrain  them  within  proper  limits  ?  There  is  no 
more  sense  in  the  stoppage  of  traffic  on  railway  systems,  because 
of  disagreements  as  to  working  hours  and  wages  than  there 
would  be  in  leaving  steamers  to  drift  in  mid-ocean,  because  the 
crews  did  not  like  the  flavor  of  their  dunderfunk. 

"Ninety-four  per  cent  of  the  400,000  railroad  workers  voted  for  a 
strike  if  the  carriers  should  fail  to  grant  their  demands.  .  .  .  The 
president  appealed  to  the  brotherhood  heads  to  have  the  strike  order  for 
Labor  day  rescinded,  but  was  told  that  the  order  was  beyond  recall. 
The  impending  strike  was  averted  September  2  by  the  passage  of  the 
Adamson  eight-hour  bill.  .  .  .  The  Adamson  eight-hour  bill  passed 
the  House  September  1,  1916  by  a  vote  of  239  to  56,  and  the  Senate 
by  a  vote  of  43  to  28.  ...  In  both  houses  the  measure  was  signed 
within  a  few  minutes  after  the  final  vote  in  the  Senate,  and  it  was  at 
once  sent  to  the  White  House  where  President  Wilson  signed  it  at  7:30 
o'clock  Sunday  morning  .  .  .  Three  hours  after  the  measure  passed 
the  Senate  the  heads  of  the  four  great  railroad  brotherhoods  cancelled 
the  strike  orders  which  were  to  have  taken  effect  on  September  4,  1916."" 

Trades  unions  will  at  length  come  under  the  law  and  will  be 
all  the  more  beneficent  for  so  doing.  The  suggestion,  which  is 
heard  of  late,  that  in  some  lines  at  least,  membership  be  made 
obligatory,  seems  worthy  of  serious  consideration.     In  working 


ECONOMIC  ADDRESSES  99 

out  a  public  policy  of  labor,  the  beginning  might  properly  be 
made  with  some  of  those  industries  which  have  been  engrossed 
by  capitalistic  combines,  or  are  natural  monopolies.  Whenever 
a  combination  seizes  upon  such  an  industry,  acquiring  the 
natural  deposits  of  material,  the  only  right  of  way,  and  the 
whole  plant  of  the  business,  rendering  competition  impossible, 
it  has  by  those  very  acts  ceased  to  be  a  private  concern.  It  has 
made  itself  agent  and  trustee  of  the  public,  and  subjected  itself 
to  public  visitation  and  control.     This  is  good  common  law. 

There  is  a  large  body  of  most  earnest  souls  who  despair  of 
the  economic  amelioration  of  humanity  on  its  present  line  of 
advance.  Freedom  of  contract  has,  they  say,  found  its  logical 
outcome  in  the  corporation  and  trust,  which  annul  competition. 
Individualism  in  things  economic  has  wrought  the  devil's  own 
ruin,  and  must  give  way — give  way  to  socialism,  by  which  they 
mean  the  coUectivistic  state,  which  state  is  to  be  sole  proprietor, 
sole  capitalist,  sole  employer. 

Could  such  a  state  be  organized  and  operated  it  would 
establish  a  most  galling,  suflfocating,  deadening  slavery.  But  it 
will  never  exist,  except  in  the  romances  of  amiable  enthusiasts.^^ 

For  all  that,  there  is  good  in  socialism,  when  tempered  and 
moderated  by  due  admixture  with  individualism.  The  social- 
istic principle  is  capable  of  far  wider  application  in  human  affairs 
than  has  yet  been  made,  and  will  in  the  future  be  given  a  de- 
velopment in  institutions  which,  could  we  foresee  it,  would 
surprise,  perhaps  alarm,  us  all.  The  modern  division  of  labor 
makes  classes  and  individuals  more  dependent  on  one  another 
than  ever  before.  The  problem  for  the  economist  of  the  future 
is  that  of  so  conserving  public  interests  as  not  to  paralyze  private 
energy;  to  gain  for  society  all  the  advantages  of  brotherhood 
without  sapping  and  withering  manhood.  Brotherhood  on  the 
basis  of  manhood,  the  burden  of  Bums'  glorious  song,  is  both 
the  guiding  principle  and  the  final — but  we  must  fear  very  dis- 
tant— goal  of  human  progress. 

"Then  let  us  pray,  that  come  it  maj'^ 

As  come  it  will  for  a*  that; 
That  sense  and  worth,  o'er  a'  the  earth. 

May  bear  the  gree,  and  a'  that, 
For  a'  that,  and  a'  that 

It's  comin'  yet  for  a'  that. 
When  man  to  man  the  world  o'er 

Shall  brothers  be  for  a'  that." 


NOTES 

>  American  Economic  Association     Publications     8:19-40. 

^American  Economic  Review  8:15.  Presidential  address  of  Professor  John  R.  Com- 
mons at  the  Thirtieth  Annual  Meeting  of  the  American  Economic  Association,  1917. 

'See  W.  S.  Jevons,  PrinciHes  of  Political  Economy,  London,  1911,  pp.  16-22  and 
Theory  of  Political  Economy,     London,     1911,     p.  39. 

*  Colonel  Carroll  D.  Wright,  for  many  years  United  States  Commissioner  of  Agriculture 
and  charter  member  of  the  American  Economic  Association. 

'  American  Economic  Association,     Publications     4:383. 

Fields  Sciences 

'Ethical,  .  ■ .  "Social  Science" 

(Private 

SllpIOLOGY-^  Industrial,     .-.  Economics \ 

(Public 

.Jural,  .  ■  .  Politics 

'  Platform  of  the  People's  Party  adopted  at  the  convention  held  in  Omaha,  Nebraska, 
July  4,  1892.     See  any  large  city  daily  of  the  time. 

'  Hearings  before  the  Committee  of  Investigation  of  United  States  Steel  Corporation, 
House  of  Representatives,  1912.  Testimony  of  James  J.  Hill,  4:3155,  3160,  3162,  3168-9, 
3106,  3206,  3236.  The  facts  illustrate  the  colossal  stupidity  of  our  national  mining  policy, 
as  well  as  Mr.  Hill's  magnanimity.  On  page  3194  the  holdings  of  the  Steel  Corporation 
were  placed  by  Mr.  Hill's  attorney  at  700,000,000  of  tons. 

'  Department  of  Commerce  and  Labor,  Bureau  of  Corporations,  Part  I.  The  Timber 
Industry,  1913,  1:12-13.  See  Chapter  VI,  Public  Land  Policy  a  Primary  Cause  of 
Consolidation  of  Timber  Ownership,  215-271. 

'  See  John  R.  Commons'  address  as  cited  ante,  page  14,  for  unanticipated  evils  growing 
out  of  the  Government  Reclamation  Policy. 

1"  See  The  General  Statutes  of  Minnesota,  1913,  sections  335  and  following  for  the  existing 
law  providing  for  "Nominations  by  Direct  Vote."  It  was  first  enacted  in  1905  and  has  been 
repeatedly  amended.  Although  it  has  been  severely  criticized  no  legislature  has  yet  ventured 
to  reinstall  the  "machine"  which  it  was  intended  to  abolish. 

^^  Information  Annual,     1916,     p.  481. 

1*  Herbert  Spencer,  Coming  Slavery. 


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